Asian currencies advanced, led by South Korea’s won, on speculation policy makers will continue to raise borrowing costs to fight inflation and the Federal Reserve will unveil stimulus measures to revive the U.S. economy. The MSCI Asia-Pacific Index of stocks snapped a three-day decline before the Fed holds its annual symposium on Aug. 26. The Federal Open Market Committee said earlier this month it is “prepared to employ” additional tools to bolster the economy, which was taken as an indication it is considering another round of bond buying that increases the supply of dollars. The Bank of Thailand will lift its benchmark interest rate tomorrow, according to economists surveyed by Bloomberg. A third round of quantitative easing “is on everyone’s mind,” said Sacha Tihanyi, a Hong Kong-based senior currency strategist at Scotia Capital, the investment banking unit of Bank of Nova Scotia. “If domestic demand remains robust, Asian central banks will still be biased for tightening.” The won strengthened 0.6 percent to 1077.90 per dollar as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. The Philippine peso gained 0.4 percent to 42.333 and the Singapore dollar climbed 0.3 percent to S$1.2031. Central bankers from around the world will meet at Jackson Hole, Wyoming this week, where Fed Chairman Ben S. Bernanke foreshadowed the second round of quantitative easing last year. More bond purchases by the Fed would likely support Asian currencies by increasing the amount of funds available to be invested in the region’s higher-yielding assets. More Tightening China, Malaysia, South Korea, the Philippines and Taiwan will all lift borrowing costs further this year, according to the median estimates in Bloomberg surveys. Thailand’s monetary authority will raise the one-day bond repurchase rate by a quarter of a percentage point to 3.50 percent, according to 16 of 20 economists surveyed by Bloomberg. Four forecast no change. The baht was little changed at 29.84 per dollar, near a one-week high of 29.80 reached yesterday. “Most players in the market are waiting to see the results of the central bank meeting tomorrow and that’s why the market is quiet,” said Norawit Suparinayok, a foreign-exchange trader at Bangkok Bank Pcl. China’s yuan advanced 0.07 percent to 6.3970 per dollar, snapping a four-day decline, after the central bank set a stronger daily reference rate for the currency and data signaled the economy is still performing well enough to fuel inflation. Yuan Appreciation Trend The fixing was set at 6.3987 per dollar, the second consecutive day it has been increased. The HSBC Flash China Manufacturing Purchasing Managers’ Index was at 49.8 for August, compared with 49.3 in July, according to HSBC Holdings Plc, which released the estimate based on 85 to 90 percent of total responses before it publishes the final data at the beginning of September. A reading below 50 indicates contraction. “The trend is pretty much intact,” said Nizam Idris, a foreign-exchange strategist at Macquarie Bank Ltd. in Singapore “The argument is that China needs a stronger currency to curb money growth and inflation. The appreciation trend will have to continue.” Elsewhere, Indonesia’s rupiah, the Taiwan dollar and India’s rupee gained 0.1 percent to 8,538, NT$28.990 and 45.63 per dollar, respectively. Malaysia’s ringgit was little changed at 2.9675. To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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