South Korea’s won and the Singapore dollar led gains in Asian currencies as a pickup in U.S. consumer spending spurred demand for riskier assets, helping emerging markets attract funds. The MSCI Asia-Pacific Index of stocks rose for a fourth day after U.S. consumer spending increased 0.8 percent in July from the previous month, when it fell 0.1 percent. South Korea’s current-account surplus widened to a nine-month high of $4.9 billion in July, according to data released yesterday, and economists surveyed by Bloomberg predict the Bank of Thailand will tomorrow report the biggest surplus in five months. The won strengthened 0.2 percent to 1,071.70 per dollar as of 3 p.m. in Seoul, after gaining 1.3 percent in the last two days, according to data compiled by Bloomberg. The Singapore dollar advanced 0.1 percent to S$1.2067 in offshore trading and the Chinese yuan reached a 17-year high before trading little changed at 6.3804. Financial markets are closed in Indonesia, Malaysia, the Philippines and Singapore for holidays. “Should global equity sentiment continue to show improvement, as it did yesterday, you will see currency gains correlating with portfolio inflows,” said Sacha Tihanyi, a Hong Kong-based senior currency strategist at Scotia Capital, the investment banking unit of Bank of Nova Scotia. “The portfolio flows are key drivers, certainly.” Asia’s developing economies will expand 8.4 percent this year, outpacing growth of 2.5 percent in the U.S. and 2 percent in the euro area, according to International Monetary Fund estimates released in June. India’s gross domestic product rose 7.7 percent last quarter from a year earlier, beating the median estimate of 26 economists in a Bloomberg News survey for a 7.6 percent gain, a government report showed today. Stocks Rally The won rose for a third day as overseas investors bought more Korean shares than they sold, following net sales of $5.16 billion this month through yesterday. The MSCI Asia Pacific Index climbed 1.1 percent and the South Korea’s Kospi Index gained 0.8 percent. The Standard & Poor’s 500 Index rallied 2.8 percent to its best close in almost a month. “Overseas stock rallies after the U.S. economic data are supporting sentiment in the market,” said Yu Won Jun, a currency dealer with Korea Exchange Bank in Seoul. “Still, won movements will be limited as both exporters’ and importers’ deals near the end of the month prevent the currency from moving in one direction.” The yuan touched 6.3705, its strongest level since the country unified the official and market exchange rates in 1993, after policy makers said it’s difficult to keep inflation within target, fueling speculation the central bank will allow currency gains to curb price increases. China’s Inflation China’s overall price level may remain high, the National Development and Reform Commission said in a statement posted on its website yesterday. Global liquidity and imported inflation will make it more difficult for the government to meet its aim of containing consumer-price gains within 4 percent this year, according to the statement. “China may not want to deploy interest-rate hikes to deal with inflation for now on economic-growth risks,” said Tommy Ong, senior vice-president of treasury and markets at DBS Bank (Hong Kong) Ltd. “The government will let the currency appreciate gradually to ease imported costs.” Elsewhere, Taiwan’s dollar and India’s rupee were little changed at NT$29.035 per dollar and 46.06, respectively, while Thailand’s baht slid 0.1 percent to 30.02. To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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