Korean won, Thai baht, Indian rupee advance

Bloomberg, Hong Kong

The South Korean won climbed for a third day, reversing earlier losses to close at its strongest in seven years, on speculation exporters converted overseas dollar earnings into the local currency.

The won's 0.5 percent decline on Tuesday prompted some companies to sell their dollars. A weakening currency raises the foreign exchange proceeds exporters such as Samsung Electronics Co., the world's second-biggest semiconductor maker, earn abroad.

The won rose 0.2 percent to 1,090.30 against the dollar as of 4 p.m. in Seoul, its highest close since Nov. 24, 1997, according to Seoul Money Brokerage Services Ltd.

"Exporters sold dollars for won," said Jeff Kim, a Seoul- based trader at Korea Exchange Bank, the country's fifth-biggest lender. The won's slide provided them with a good opportunity to buy the currency, he said. It may rise as high as 1,085 this week, he said.

Demand and supply will determine the exchange rate, central bank Assistant Governor Rhee Yeung Kyun today said. He's in charge of currency and international affairs.

"The won can get a little stronger," said Chang Won Hwang, assistant currency manager in Seoul at Kookmin Bank, South Korea's biggest lender. "The central bank may have changed its policy stance a little" to let the currency strengthen "as it may think the global dollar weakness can go further into next year."

The Thai baht rose 0.2 percent to 40.37 after Bank of Thailand Governor Pridiyathorn Devakula said the central bank won't sell the currency, which is at an "appropriate level".

The baht's gains lagged those of other Asian currencies, suggesting the Bank of Thailand may allow it to "catch up", said strategists such as Danny Suwanapruti. The baht's gains have been tempered by violence in the south of the country.

"What I've heard is the central bank hasn't been in the market recently" to sell the baht, said Suwanapruti, an analyst in Singapore at Forecast Ltd. "The baht has been under- performing regional currencies, partly due to the problems in the South. The sentiment now has improved slightly and people seem more confident in holding baht."

The baht may strengthen to 40.20 by year's end, Suwanapruti said.

The currency climbed 2.9 percent in the past three months compared with a 6.3 percent advance in South Korea's won and a 3.2 percent gain in the Indonesian rupiah.

India's rupee advanced on expectations investors abroad will buy the nation's stocks after the benchmark share index had a third winning week.

Fund managers based overseas bought US$666.4 million so far in November compared with $705 million for the whole of October, the securities market regulator said on its Web site.

The Taiwan dollar weakened for the first day in four on speculation the central bank will sell its currency to limit gains. The Taiwan dollar closed at NT$32.819 against its U.S. counterpart from NT$32.802 yesterday, according to Taipei Forex Inc.

Analysts such as Jan Lambregts predict regional currencies will rise.

"I would expect more dollar weakness in the medium term," said Lambregts, head of Asia Pacific research in the treasury department of Rabobank in Singapore. "The U.S. policy is one of benign neglect. That means appreciating pressure on Asian currencies."

In other trading, the Singapore dollar held at S$1.6498. The Philippine peso closed little changed at 56.355, according to the Bankers Association of the Philippines. Financial markets in Indonesia were closed this week in observance of a Muslim Eid al- Fitr festival.