Asian currencies strengthened, led by the Philippine peso, on speculation global funds will pump more funds into the region to profit from rising interest rates and the world’s fastest economic growth. China, India, South Korea, Indonesia, Taiwan, Thailand, Malaysia and the Philippines all raised borrowing costs this year to tame inflation, widening the gap with the U.S. Federal Reserve’s near-zero benchmark rate. Reports showed yesterday that consumer-price gains quickened in Taiwan and the Philippines, bolstering the case for further monetary tightening. Global funds bought some $500 million more shares than they sold yesterday in South Korea and Thailand, exchange data show. The peso gained 0.5 percent to 42.865 per dollar as of 11 a.m. in Manila, earlier touching an eight-week high of 42.853, according to data compiled by Bloomberg. South Korea’s won rose 0.2 percent to 1,064.05, Taiwan’s dollar added 0.1 percent to NT$28.776 and the Singapore dollar advanced 0.1 percent to S$1.2258. “The prospect of rate increases is definitely supportive for regional currencies,” said Kenichiro Ikezawa, a fund manager at Daiwa SB Investments Ltd. in Tokyo. “Compared with other emerging markets, Asia looks to be the most attractive because of its economic fundamentals.” 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. Yield Gap 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. Malaysia’s central bank will boost its policy rate tomorrow by a quarter of a percentage point to 3.25 percent, according to 10 of 15 economists surveyed by Bloomberg. Five forecast no change. Malaysia’s consumer prices rose 3.3 percent in May from a year earlier, the most since March 2009, a government report showed last month. Prices in the Philippines increased 5.2 percent in June and those in Taiwan climbed 1.9 percent. Emerging-market currencies were also supported today after Greece said its banks were willing to roll over their government bonds as part of a European Union aid plan, helping reduce the likelihood of a default. “People feel that the worst has passed with the Greece problem and this has encouraged the market to increase risk appetite,” said Rafael Algarra, treasurer at Security Bank Corp. in Manila. Indonesia’s rupiah rose 0.1 percent to 8,528 per dollar, Malaysia’s ringgit added 0.1 percent to 3.0053 and the Thai baht gained 0.1 percent to 30.46. China’s yuan was unchanged from yesterday at 6.4676. 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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