By Bob Chen and David Yong April 7 (Bloomberg) -- Asian currencies gained, led by Malaysia’s ringgit, after some U.S. central bank officials said they preferred to keep interest rates low and traders boosted bets China will let the yuan appreciate. The Bloomberg-JPMorgan Asia Dollar Index, a gauge of the region’s 10 most-used currencies excluding the yen, and the MSCI Asia Pacific Index of shares were both headed for their highest closes since August 2008. Minutes of a March 16 Federal Reserve meeting, released yesterday, showed policy makers warned against raising rates too soon because unemployment may hobble a recovery in the world’s largest economy. “There is a bullish view on regional currencies given the Fed rate outlook,” said Zaki Mokhtar, head of foreign-exchange spot trading at RHB Bank Bhd. in Kuala Lumpur. “There’s also very strong pressure for the yuan to appreciate. Foreigners are selling the dollar and buying stocks.” Malaysia’s ringgit strengthened 0.6 percent to 3.1950 per dollar as of 11:28 a.m. in Kuala Lumpur. Taiwan’s dollar advanced 0.4 percent to NT$31.575 and the Philippine peso rose 0.4 percent to 44.76. The three currencies today reached their highest levels in at least 19 months. China may widen the daily trading band for its currency and allow the yuan to appreciate, the Financial Times reported, citing Ba Shusong, deputy director-general of the Financial Research Institute at the Development Research Center. Economic growth in East Asia, excluding Japan and the Indian subcontinent, will accelerate to 7.6 percent this year from 4.5 percent in 2009, according to World Bank estimates released today. Growth, Rates The U.S. economy shrank 2.4 percent last year, its worst performance since 1946, and the Fed has kept its target rate for overnight loans between banks at zero to 0.25 percent since December 2008. Bank Negara Malaysia raised its overnight policy rate to 2.25 percent on March 4, saying the nation’s economic recovery is “firmly established.” The Asia Dollar Index has risen 1.7 percent this year and the MSCI Asia Pacific Index 6.4 percent as global funds have pumped more funds into regional assets. Stock markets in South Korea, India and Taiwan have together attracted more than $13 billion from overseas so far this year, exchange data show. Taiwan’s dollar strengthened for a fourth day on speculation exports will pick up should China, the island’s No. 1 trading partner, allow yuan appreciation to resume following a 21-month-old peg to the greenback. “Overseas investors are going with the trend on the yuan issue,” said Tigr Cheng, a strategist at Polaris Securities Co. in Taipei. “Given close Taiwan-China ties, they’re sending funds in.” Yuan Bets Twelve-month non-deliverable forwards for the yuan climbed 0.1 percent to 6.6295 per dollar, reflecting bets the currency will strengthen 3 percent from the spot rate of 6.8255, according to data compiled by Bloomberg. That’s the ninth daily gain in a row, the longest winning streak in more than a year. South Korea’s won rose 0.2 percent to 1,121 per dollar, approaching an 18-month high of 1,117.4 reached Jan. 11, as global funds bought more Korean stocks than they sold for a 19th day. All eight economists in a Bloomberg survey forecast the central bank will keep its benchmark rate at a record-low 2 percent when borrowing costs are reviewed on April 9. “The South Korean won will continue to trade stronger even at these levels,” said Bernard Yeung, Hong Kong-based head of currency trading for Asia at National Australia Bank Ltd. “They will look to continue holding interest rates, like many of the central banks in the region, as they don’t want their currency to appreciate too quickly.” Elsewhere, Indonesia’s rupiah traded at 9,042 per dollar, from 9,046 yesterday, and Singapore’s dollar rose 0.1 percent to S$1.3958. India’s rupee strengthened 0.3 percent to 44.345. To contact the reporter on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net.

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