Asian currencies advanced, led by Thailand’s baht and Taiwan’s dollar, on optimism the world’s fastest economic growth and rising interest rates will attract funds to regional assets. The baht gained by the most since February 2008 after Prime Minister Abhisit Vejjajiva and the defence minister acknowledged an election victory by allies of exiled premier Thaksin Shinawatra, damping concern the result would be disputed and lead to political instability. Taiwan’s central bank raised its benchmark interest rate last week to tame inflation and economists surveyed by Bloomberg expect Bank Negara Malaysia to follow suit this week. The Bloomberg-JPMorgan Asia Dollar Index rose 0.1 percent to 119.10 as of 10:25 a.m. in Hong Kong, near a 14-year high of 119.26 reached in May. The baht surged 1.2 percent to 30.44 per dollar, the biggest gain since February 2008, according to data compiled by Bloomberg. The Taiwan dollar advanced 0.4 percent to NT$28.67, South Korea’s won strengthened 0.3 percent to 1,063.70 and Malaysia’s ringgit added 0.2 percent to 3.0015. “Asia’s strong economic growth continues to drive the rate-rising trend in the region,” said Henry Lin, a Taipei- based foreign-exchange trader at Taiwan Shin Kong Commercial Bank. “That’ll attract more foreign funds to the region and support regional currencies.” Growth, Inflows Developing economies in Asia will expand 8.4 percent in 2011, outpacing growth of 2.5 percent in the U.S. and 2.0 percent in the euro region, according to International Monetary Fund estimates released last month. Overseas investors bought $1.1 billion more Indonesian, South Korean and Taiwanese equities than they sold last week, exchange data show. Net purchases in India totaled $794 million in the three days ended June 29. Benchmark interest rates of 7.5 percent in India and 6.75 percent in Indonesia compare with a maximum 0.25 percent in the U.S. and Japan. Taiwan raised its rate to 1.875 percent last week from 1.75 percent. Data tomorrow will show the island’s consumer prices gained 1.8 percent in June, the most since February 2010, while inflation in the Philippines accelerated to a 26-month high of 4.6 percent, Bloomberg surveys show. The baht rose to its strongest level in more than a week as Pheu Thai, led by Thaksin’s sister Yingluck Shinawatra, was expected to win 264 seats in the 500-member parliament with more than 98 percent of the vote counted, according to Election Commission data. After Abhisit congratulated Yingluck on “becoming the next prime minister,” the defense minister said the army accepted the result. Thai Election Global funds slashed their holdings of Thai stocks by $884 million in June and the baht weakened 1.4 percent amid concern the election would spark violence. The decisive win by Thaksin’s allies may bring stability to a nation beset by clashes between his supporters and opponents that claimed more than 100 lives since the last vote in 2007. “The majority victory is a very welcome outcome and foreign investors will come back very quickly,” said Frances Cheung, a senior strategist at Credit Agricole CIB in Hong Kong. “It cleared a part of the uncertainties and sentiment will stabilize.” The ringgit rose to a four-week high as nine of 13 economists in a Bloomberg survey forecast Bank Negara Malaysia will lift its overnight rate by a quarter of a percentage point to 3.25 percent on July 7. Four predicted the monetary authority will leave borrowing costs unchanged. Exports rose 11 percent in May from a year earlier after increasing 11.1 percent the previous month, the most since July 2010, economists predicted in a separate survey before government data due tomorrow. Rate Review “The market is still looking out for one more rate hike this quarter and the ringgit is benefiting from a rebound in appetite,” said Faizal Yussof, a currency trader at KAF Investment Bank Bhd. in Kuala Lumpur. “On balance, the global economy is going through a soft patch, and we are cautious of the risk to the weaker side in the short term.” Consumer prices rose 3.3 percent in May, the most since March 2009, official data show. Elsewhere, the Singapore dollar rose 0.2 percent to S$1.2240 versus the greenback and Indonesia’s rupiah rose 0.1 percent to 8,526. China’s yuan was little changed at 6.4640 and the Philippine peso appreciated 0.3 percent to 43.055. To contact the reporters on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net; 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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