SINGAPORE: The Indian rupee is set to be this week's biggest gainer among regional peers, and to enjoy its largely weekly rise since October, as encouraging bond sales in Europe lifted most Asian currencies on Friday and spurred hopes for more inflows. Emerging Asian currencies are expected to get further support as more funds including real money investors are likely to keep buying them on the region's stronger economic and fiscal fundamentals, as well as on signs that worries about a credit crunch may be easing, dealers and analysts said. "Equities are doing well. Data in Asia will turn higher and the euro sentiment is stabilising somewhat. All that equals higher Asian currencies," said Jonathan Cavenagh, a foreign exchange strategist for Westpac in Singapore. Some real money investors bought emerging Asian currencies in recent sessions on dips, and they may purchase more even though the size would be limited, dealers and analysts said. Interbank speculators are likely to join the demand, they added. "There is nothing wrong in Asia. So, dollar/Asian currencies are drifting lower in the meantime," said a senior dealer at a Malaysian bank. The rupee has risen 2.5 percent against the dollar so far this week. If the gain is maintained, that would be the largest weekly rise since it strengthened 2.6 percent in the last week of October, according to Thomson Reuters data. The Indian currency, Asia's worst performer last year, has enjoyed inflows to the country's bonds and been the best performer in 2012. In a closely watched test of investor confidence on the euro zone, Spain sold double the targeted amount at its auction of a new three-year bond and two existing bonds maturing in 2016, while yields halved at an Italian Thursday. The successful sales raised hopes for a similarly positive result when Italy sells up to 4.75 billion euros of longer-dated bonds later on Friday. The European Central Bank, which kept interest rates unchanged at a record low 1 percent on Thursday as expected, lent support as President Mario Draghi said that there was still scope for further interest rates cuts. With the positive results, the South Korean won on Friday led strength in most of its Asian peers. Offshore funds and local interbank speculators cleared dollar-long positions, while importers' dollar bids limited its strength, dealer said. "Despite strong demand from importers, I think we are seeing a big change in a trend," said a foreign bank dealer in Seoul. Currency investors ignored the central bank's decision to hold its key policy rate, as was widely expected. Still, sustained worries about the euro zone's debt problems kept investors from chasing emerging Asian currencies, dealers and analysts said. The Malaysian ringgit gave up some earlier gains as interbank speculators covered dollar-short positions ahead of technical resistance lines. Saktiandi Supaat, head of FX Research at Maybank in Singapore, said gains in emerging Asian currencies might be temporary, saying he has not heard of inflows from hedge funds and real money on Friday. But some real money investors are expected to show interest in selected emerging Asian currencies such as the Indonesian rupiah and the Philippine peso, he added. CURRENCIES VS U.S. DOLLAR Change on the day at 0400 GMT Currency Latest bid Previous day Pct Move Japan yen 76.81 76.75 -0.08 Sing dlr 1.2879 1.2905 +0.20 Taiwan dlr 29.963 30.002 +0.13 Korean won 1151.10 1158.20 +0.62 Baht 31.77 31.83 +0.19 Peso 43.85 44.06 +0.49 Rupiah 9170.00 9150.00 -0.22 Rupee 51.40 51.62 +0.43 Ringgit 3.1325 3.1415 +0.29 Yuan 6.3163 6.3178 +0.02 Change so far in 2012 Currency Latest bid End prev year Pct Move Japan yen 76.81 76.92 +0.14 Sing dlr 1.2879 1.2969 +0.70 Taiwan dlr 29.963 30.290 +1.09 Korean won 1151.10 1151.80 +0.06 Baht 31.77 31.55 -0.69 Peso 43.85 43.84 -0.01 Rupiah 9170.00 9060.00 -1.20 Rupee 51.40 53.17 +3.44 Ringgit 3.1325 3.1685 +1.15 Yuan 6.3163 6.2940 -0.35

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