By Bob Chen and David Yong April 7 (Bloomberg) -- Asian currencies gained, paced by Malaysia’s ringgit and the Taiwan dollar, after some U.S. central bank officials said they wanted 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 both reached their highest levels since August 2008. East Asian economies have emerged stronger from the global crisis and may experience “rapid growth” in coming years, the World Bank said today. “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 as much as 0.7 percent to 3.1921 per dollar before trading 0.1 percent higher at 3.2130 as of 5:30 p.m. in Kuala Lumpur. Taiwan’s dollar advanced 0.2 percent to NT$31.628 and the Philippine peso rose 0.3 percent to 44.798. All three currencies today reached their highest levels in at least 19 months. 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. 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. Growth, Rates 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. 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 added to their holdings of 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. Intervention Risk Policy makers in Asia are still intervening in foreign- exchange markets to limit the strength of their currencies as China maintains the value of the yuan, the World Bank said in its semi-annual report today. “Robust optimism among domestic and foreign investors, and China’s continued de facto peg to the dollar, has led most authorities in the region to engage in large exchange market intervention to limit currency appreciation,” it said. “With rising inflation and asset prices and continued strong economic growth, the real exchange rate in China is likely to appreciate.” Twelve-month non-deliverable forwards for the yuan rose in each of the last eight days and yesterday reached an 11-week high of 6.6145 per dollar. They were little changed today at 6.6377, reflecting bets the currency will strengthen 2.8 percent from the spot rate of 6.8256, according to data compiled by Bloomberg. Taiwan-China Ties 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.” South Korea’s won rose 0.2 percent to 1,120.6 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 9,053 per dollar, from 9,046 yesterday, and Singapore’s dollar was little changed at S$1.3969. India’s rupee fell 0.1 percent to 44.51. 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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