Oct. 1 (Bloomberg) -- Indonesia’s rupiah and the Indian rupee led gains among Asian currencies after reports showing pickups in China’s manufacturing and Korean exports added to evidence regional economies are recovering from a slump. The rupiah climbed for a third day as the nation’s yield premium helped attract funds from abroad. The Taiwan dollar and South Korea’s won retreated from one-year highs on speculation their central banks intervened to curb appreciation that may hurt exports. “The rupiah continued to rise as funds poured in, with investors still liking the yield due to the wide differentials amid improving risk appetite,” said Esther Chandra, a currency dealer at PT Bank Pan Indonesia in Jakarta. “Funds are coming especially into the bond market. Funds are also going into stocks.” The rupiah strengthened 0.4 percent to 9,620 as of 4:04 p.m. in Jakarta, according to data compiled by Bloomberg. The rupee climbed 0.8 percent to 47.715. Taiwan’s dollar declined 0.4 percent to NT$32.319 after earlier reaching a one-year high of NT$31.995. China’s manufacturing expanded at the fastest pace in 17 months in September, according to the findings of a purchasing managers survey published today by the Federation of Logistics and Purchasing in Beijing. Korea reported a 6.6 percent drop in exports for September, the smallest decline since shipments began sliding in November 2008. Global Growth Asian Development Bank President Karuhiko Kuroda said yesterday governments in the region, excluding Japan, will withdraw expansionary policies sooner than the U.S. and Europe because their economic recoveries are more advanced. The International Monetary Fund is forecasting the world economy will expand 3.1 percent in 2010, more than a July forecast of 2.5 percent. The more than $2 trillion in stimulus packages and demand in Asia is pulling the global economy out of its worst recession since World War II. Indonesia’s rupiah rose to the highest level in two weeks after Federal Reserve Vice Chairman Donald Kohn said U.S. interest rates will likely stay near zero “for an extended period,” reinforcing the relative attraction of the Southeast Asian nation’s assets. The Fed’s benchmark rate has been a maximum 0.25 percent since December, while Indonesia’s is 6.5 percent and India’s 6 percent. Indonesia’s 10-year local-currency bonds yield 9.96 percent and India’s 7.2 percent, compared with 3.31 percent on similar-maturity U.S. Treasuries. The rupiah appreciated 13 percent this year, Asia’s best performance, as foreigners’ holdings of Indonesian bonds rose to 93.03 trillion rupiah ($9.6 billion) as of Sept. 25, from 87.61 trillion rupiah at the end of 2008. Intervention Risk South Korea’s won was little changed, paring a gain of as much as 1 percent, after the government said it was prepared to take measures to curb volatility in the currency market. Policy makers view the “herd behavior in the market” as “quite excessive,” Kim Ik Joo, a finance ministry official said in Gwacheon today. “The government is intervening because Korea is relying a lot on exports for growth,” said Yoo Jae Ho, a foreign-exchange and bond analyst at Kiwoom Securities in Seoul. “There’s a strong need to ensure the won doesn’t get too strong.” The won was at 1,178.25 in Seoul, according to data compiled by Bloomberg, versus 1,178.05 yesterday. The currency earlier reached 1,166.50, the strongest level since September 2008. Markets in South Korea will be closed tomorrow for a holiday. Taiwan’s dollar fell as the Central Bank of the Republic of China (Taiwan) bought the greenback today to weaken the local currency, according to three traders, who asked not to be identified. The currency rose in early trading today on bets closer trade ties with China, the world’s third-biggest economy, will help the local economy and spur overseas demand for the island’s assets. “The central bank has shown its determination to maintain stability in the foreign-exchange market,” said Yang Kung-yi, a currency trader at Shanghai Commercial & Savings Bank in Taipei. “There was hot money coming in.” ‘Step In’ The island’s central bank said yesterday that it would “step in to maintain order” if excessive volatility is caused by “seasonal or irregular factors.” Overseas investors bought NT$10.1 billion ($314 million) more Taiwan shares than they sold today, taking net purchases for the year above the $12 billion level. The benchmark Taiex stock index climbed 0.5 percent to 7,545.29, its highest close since June 2008. India’s rupee climbed to the strongest level in seven weeks. Foreign investment in the stock market reached an all-time high of $67.3 billion on Sept. 29, data from the Securities and Exchange Board showed. “The latest figures for foreign portfolio inflows remain impressive and the rupee is gaining from the expectation that the trend will continue,” said Roy Paul, assistant manager of treasury at Federal Bank Ltd. in Mumbai. Elsewhere, the Philippine peso climbed 0.7 percent to 47.060 per dollar and the Malaysian ringgit fell 0.1 percent to 3.4657. The Singapore dollar dropped 0.2 percent to S$1.4109. Thailand’s baht slid 0.1 percent to 33.49. Local financial markets in China and Hong Kong are closed today for public holidays. To contact the reporters on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net

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