By Yoshiaki Nohara and Ron Harui April 1 (Bloomberg) -- The dollar traded near a one-week low against the euro as signs Asian economies are picking up damped demand for the greenback as a refuge. The yen was close to an eight-week low against the euro as Asian stocks rose on reports showing China’s manufacturing accelerated and confidence improved among Japan’s industrial companies. New Zealand’s dollar fell against all major counterparts after the International Monetary Fund said the currency was overvalued and may decline as the nation’s interest-rate advantage over the U.S. narrows. “Japan’s rebound is doing OK, while China and India are supporting an overall recovery in Asia,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd. “There’s a bias for the dollar and the yen to weaken.” The dollar traded at $1.3510 per euro as of 7:09 a.m. in London from $1.3510 in New York yesterday. It earlier touched $1.3561, the weakest since March 23. The yen was at 126.37 per euro from 126.27. Earlier, it traded at 126.63, the lowest level since Feb. 3. The U.S. currency rose to 93.53 from 93.47 after climbing to 93.64, the strongest since Jan. 8. The Bloomberg-JPMorgan Asia Dollar Index, a gauge of the region’s 10 most-used currencies excluding the yen, was headed for its highest close in 19 months. The MSCI Asia Pacific Index of regional shares rose 0.9 percent and the Nikkei 225 Stock Average gained 1.4 percent. China, Japan Reports China’s Purchasing Managers’ Index rose to 55.1 in March from 52 in February, according to Li & Fung Group, a Hong Kong- based company that released data for the Federation of Logistics and Purchasing. The result was in line with the median estimate in a Bloomberg News survey of economists. The Bank of Japan’s Tankan survey showed confidence among Japanese large manufacturers was minus 14 in the three months ended in March, the strongest level since September 2008 and matching the median forecast of economists. A negative number means pessimists outnumber optimists. “With growth prospects in the region looking good and fund inflows into local stock markets, Asian currencies are under pressure to strengthen,” said Minori Uchida, senior analyst at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s biggest bank. Malaysia’s ringgit climbed as much as 0.3 percent to 3.2530 per dollar, its strongest level since July 2008. South Korea’s won rose 0.5 percent to 1,126.25. Korea Growth Bank of Korea Governor Kim Choong Soo said today in his inaugural speech that policy makers’ main task is to stabilize prices and boost employment to help promote economic growth. Korea’s exports rose 35.1 percent in March from a year earlier, the Ministry of Knowledge Economy said today. The median estimate in a Bloomberg News survey of economists was for a 31.7 percent gain. The trade surplus widened to $2.2 billion from 2.1 billion in February. “Growth is still strong in this region, plus inflationary pressures continue, so the dollar should head lower against Asian currencies,” said Bernard Yeung, Hong Kong-based head of currency trading for Asia at National Australia Bank Ltd. “We should be seeing investors shift from G-7 countries to Asia.” The New Zealand dollar slumped after the IMF said that the nation’s current-account deficit will widen if the currency remains where it is now. “Our estimates suggest the currency is presently overvalued by 10 percent to 25 percent,” the Fund said in its statement. “Part of the overvaluation may be temporary and the exchange rate may depreciate as the interest-rate differential narrows with eventual tightening by the U.S. Federal Reserve.” U.K. Elections The so-called kiwi fell 0.7 percent to 70.55 U.S. cents. It dropped 0.6 percent to 66.00 yen. Benchmark interest rates of 4 percent in Australia and 2.5 percent in New Zealand compare with as low as zero in the U.S. and 0.1 percent in Japan. The pound traded near a two-week high versus the dollar after the treasury spokesman for the U.K.’s opposition Liberal Democrats dismissed concerns that market turmoil would ensue from an election that failed to give any party a majority in Parliament. The chancellor of the exchequer and his counterparts from the two main opposition parties would probably work together to reduce the nation’s record budget deficit of about 12 percent, said the Liberal Democrats’ Vince Cable in an interview. The pound was at $1.5204 from $1.5184 yesterday, after earlier touching $1.5241, the highest since March 19. To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

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