Sept. 18 (Bloomberg) -- Asian currencies including the South Korean won and Indonesia’s rupiah rose this week to the highest levels of 2009, as increasing signs of a global economic recovery bolstered demand for emerging-market assets. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-traded regional currencies excluding the yen, rallied to an 11-month high as record low rates for borrowing dollars increased appetite for higher-yielding investments. Overseas investors added to their holdings of Asian stocks, helping most benchmark share indexes extend this month’s gains. “Central banks are not going to fight a general dollar weakening trend as long as everything’s moving together,” said Gerrard Katz, head of currency trading at Standard Chartered Plc in Hong Kong. “Dollar-Asia’s moving lower as a bloc. Risk appetite is still the main driver. Dollar rates are as well, and equities are important.” The Korean won gained 1.2 percent this week to 1,207.80 per dollar as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. It touched 1204.60 yesterday, the strongest level since October. The rupiah appreciated 2.1 percent to 9,715 and the Philippine peso rose 1.4 percent to 47.665. The Asia Dollar Index climbed 0.4 percent in the five days, a third weekly gain. Emerging Markets Threadneedle Asset Management Ltd., Schroders Plc and Ashmore Investment Management Ltd. said in interviews this month they are buying emerging-market currencies as policy makers in New Delhi and Seoul may raise interest rates to avoid inflation. Inflows into developing-market bond funds surged to an 87- week high of $540 million during the second full week of September, according to research firm EPFR Global, based in Cambridge, Massachusetts. The won gained for a fourth week as overseas funds bought more local shares than they sold for an 11th day. The greenback is “very weak” and the global trend is that most other currencies are gaining against it, including the won, Finance Minister Yoon Jeung Hyun said yesterday. The cost of three-month loans in dollars between banks, measured by the London interbank offered rate, was at a record low of 0.292 percent, according to the British Bankers’ Association. Libor is lower than equivalent rates for the yen and Swiss franc, making the greenback the cheapest funding currency for so-called carry trades, where investors borrow in a nation with low borrowing costs and invest where returns are higher. Indonesia Upgrade Indonesia’s rupiah touched 9,575 per dollar yesterday, the highest level since October 2008, as foreign investors loaded up on local stocks and bonds after Moody’s Investors Service raised the country’s credit rating. The World Bank said on Sept. 14 that Southeast Asia’s largest economy may expand 4.3 percent in 2009 compared with a previous forecast of 3.5 percent. Moody’s upgraded Indonesia’s credit rating to Ba2, two levels below investment grade, citing the economy’s “resilience to the global recession.” Overseas holdings of Indonesian debt increased to 91.2 trillion rupiah ($9.4 billion) as of Sept. 15 compared with 90.9 trillion rupiah on Sept. 11, according to the Ministry of Finance’s Web site. “We had many good catalysts for the rupiah to strengthen,” said Lindawati Susanto, head of currency trading at PT Bank Resona Perdania in Jakarta. “The Indonesian economy is quite good and Moody’s increased the sovereign rating of Indonesia.” Foreign Investors International investors bought more stocks than they sold this week in India, Indonesia, South Korea, Taiwan and Thailand. The MSCI Asia-Pacific Index of regional shares rose to the highest level in a year, Indonesia’s Jakarta Composite Index of stocks climbed for a third week, and Korea’s Kospi and Taiwan’s Taiex advanced for a fourth. The Philippine currency posted its best week in four months after National Treasurer Roberto Tan said funds raised from a sale of bonds to individual investors will allow the nation to reduce fourth-quarter borrowing. The budget was in deficit for a fourth straight month in August, the Department of Finance reported today. The shortfall for the last eight months was 210 billion pesos ($4.4 billion), equivalent to 84 percent of the record 250 billion pesos gap forecast by the government for 2009. The Philippine peso will rise 4.7 percent in six months to the highest level since 2008 as remittances beat analysts’ forecasts and because fiscal deficit concerns are “overblown,” Goldman Sachs Group Inc. said. Philippine Rate Bangko Sentral ng Pilipinas will start increasing the benchmark interest rate in the second half of 2010, supporting the exchange rate, according to Michael Buchanan, Goldman’s chief Asia- Pacific economist based in Hong Kong. “The peso has been the forgotten currency so far this year, but that may start to change,” Buchanan wrote in a research note dated yesterday. “Remittances have been performing far better than consensus, and also much better than our initial expectations.” Elsewhere, Thailand’s baht rose 0.7 percent this week to 33.72 per dollar and Taiwan’s dollar gained 0.5 percent to 32.458. China’s yuan and the Hong Kong dollar were little changed at 6.828 and HK$7.7502. India’s rupee climbed 0.5 percent to 48.2375. To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net

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