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Asian currencies gain on interest-rate advantage, inflow of funds

Asian currencies gain on interest-rate advantage, inflow of funds

Asian currencies rose on speculation interest-rate cuts in the U.S. will encourage investors to seek higher-yielding assets in the region. Taiwan's dollar climbed to a three-year high.
The Singapore dollar and the Malaysian ringgit reached the strongest levels since 1997 as their central banks allow currency appreciation to help curb inflation as commodity prices surge.
The U.S. dollar fell against all 16 of the world's major exchange rates as Federal Reserve Chairman Ben S. Bernanke may indicate yesterday he'll cut borrowing costs to revive U.S. growth.
"When people don't want to invest in the U.S., Asia is a good choice," said Takashi Yamamoto, chief trader at Mitsubishi UFJ Trust & Banking Corp. in Singapore.
"With inflation, the central banks may let the currency rise and that also supports fund inflows into the region."
The Taiwan dollar advanced to NT$30.998 against the U.S. currency, the strongest since March 2005, and rose 0.6 percent from yesterday to NT$30.92.
The Malaysian ringgit edged up 0.3 percent to 3.2030 after reaching the highest since November 1997 at 3.2021.
South Korea's won appreciated 0.5 percent to 942.35, the biggest gain in almost a month, according to Seoul Money Brokerage Services Ltd. The won may rise to 940 by the end of March and 900 by December 31, Yamamoto said.
Fund managers outside Korea bought more of the nation's shares than they sold for a second day, the longest stretch since the start of the month, according to data from the stock exchange. Investors have also been net buyers of shares in Taiwan, Philippines, Indonesia and Thailand this week.
"There will be a flight of capital to this region because of growth and returns are more attractive," said Yeo Chin Tiong, head of treasury at OSK Investment Bank Bhd. in Kuala Lumpur.
The interest-rate premium in Asian countries may widen as futures on the Chicago Board of Trade show traders see a 96 percent chance that the central bank in the U.S. will reduce the target overnight lending rate between banks by 50 basis points to 2.5 percent at their March 18 meeting and further cuts to 2 percent by June.
Indonesia's benchmark rate is 8 percent, the Philippines and South Korea's are at 5 percent, Malaysia's at 3.5 percent and Taiwan at 3.375 percent.
Singapore's dollar climbed to 1.4007, the strongest since January 1997, before trading at 1.4014 from 1.4057 late in Asia yesterday. It is the fourth best performer of Asia's currencies.