Asian currencies such as the Malaysian ringgit and Korean won strengthened this week on speculation the region will attract more overseas investors next year as economic growth accelerates.
The ringgit posted the best performance this week in Asia, after the yen, as the nation's stocks trade near a record high and the government forecasts growth of more than 6 percent next year. Malaysia's currency has climbed 6.4 percent this year, heading for a third straight annual gain since its peg to the dollar was scrapped in July 2005.
"The economy is doing well," said Sivanesan Muthusamy, head of treasury dealing at EON Bank Bhd in Kuala Lumpur. "The outlook is for a stronger ringgit."
The Malaysian currency gained 0.9 percent this week to 3.317 per dollar in Kuala Lumpur, according to data compiled by Bloomberg.
The government is "confident" growth will meet the forecast rate of 6 percent this year and may beat that rate next year, Second Finance Minister Nor Mohamed Yakcop said on Dec. 19.
South Korea's won also made a weekly gain as traders raised bets the Federal Reserve will cut US interest rates again, boosting the appeal of the Asian nation's higher yields.
The won joined gains in seven of the 10 most traded Asian currencies outside Japan on Friday after US reports showed weaker-than-expected durable good orders and an increase in jobless claims.
"The dollar is weaker so the regional currencies including the won are trading stronger," said Irene Cheung, a strategist at ABN Amro Bank NV in Singapore. "There's concern about the outlook for the US economy after the durable goods orders."
The won gained 0.5 percent this week to 936.10 per dollar, according to Seoul Money Brokerage Services Ltd. The currency may strengthen as far as 910 in the first quarter of next year, Cheung said.
The New Taiwan dollar was little changed this week at 32.499, compared with 32.485 at the end of last week, Taipei Forex Inc figures show.
The Philippine peso posted its biggest annual gain since at least 1994 as remittances rose to a record and economic growth quickens.
The peso is the best performing Asian currency this year, gaining 18.7 percent against the dollar. Funds sent back by overseas workers account for about 10 percent of the economy, and totaled US$1.39 billion in October, the most since Bloomberg began tracking the data in 1989.
"Economic data from inflation to growth has improved tremendously," said Rafael Algarra at Security Bank Corp in Manila. "Coupled with a stronger fiscal position, these have helped the peso outperform all regional currencies."
The fastest economic growth in at least three decades also helped lure foreign investors who bought US$3.7 billion more of the nation's stocks and bonds than they sold in the first 11 months of the year, almost twice the amount they invested in the same period last year.
The peso rose 0.5 percent this week to 41.285 per dollar, according to Tullett Prebon Plc. The peso has gained 2.6 percent this month, its fourth straight monthly advance.
Elsewhere, Singapore's dollar rose 0.7 percent this week to S$1.4467 from S$1.4568 at the end of last week, and Vietnam's dong gained 0.2 percent to 16,025.00. Indonesia's rupiah advanced 0.3 percent to 9,400 from 9,425, and Thailand's baht traded at 33.72 in onshore trading from 33.71.
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