The won and Malaysia’s ringgit headed for the best weekly gains since July after growth in industrial production on the mainland accelerated for a fourth month in August. Premier Wen Jiabao yesterday said China will maintain its stimulus spending to ensure the world’s third-largest economy keeps expanding. Asian stocks rallied and the dollar weakened to a one-year low against those of its six major trading partners.

“The fundamentals are supportive for this increased confidence that the global economy is turning around,” said David Cohen, an economist in Singapore at Action Economics. “The won should benefit from that. China’s indicators of real activity are picking up some steam.”

The won advanced 1.6 percent to 1,221.82 per dollar as of 1 p.m. in Seoul, versus 1,241.20 a week ago, according to data compiled by Bloomberg. The rupiah climbed 2 percent to 9,920 and the ringgit strengthened 1 percent to 3.4910.

The Bloomberg-JP Morgan Asia Dollar Index, which tracks the 10 most-traded Asian currencies outside of Japan, advanced 0.6 percent, its best weekly performance in almost two months. The MSCI Asia-Pacific Index of equities headed for the biggest five- day gain since July 24, rising 4.2 percent.

The dollar slumped for a sixth day versus the euro as investor appetite for riskier emerging-market assets increased. The greenback traded at $1.4601 per euro in Tokyo from $1.4582 yesterday. The yen was at 91.36 per dollar from 91.73.
China’s factory output increased 12.3 percent last month from a year earlier, the government said today, following a 10.8 percent expansion in July. Economists estimated 11.8 percent growth. New loans climbed to 410.4 billion yuan ($60 billion), versus 355.9 billion yuan in July and 271.54 billion yuan a year ago, the People’s Bank of China said today.

China exports

China together with Hong Kong is the biggest export market for economies including South Korea, Malaysia and Taiwan. Overseas sales on the mainland dropped 23.4 percent in August, more than the 19 percent decline predicted in a Bloomberg News survey, the customs bureau said on its Web site today.

Twelve-month yuan forwards strengthened by the most this week in more than five months on speculation the central bank will allow appreciation in the currency as growth accelerates. The contract signaled traders are betting it will appreciate 1.5 percent to 6.7300 versus the spot rate of 6.8278 today.

“The newly released data is prompting traders to step up bets on yuan appreciation,” said Liu Xin, an analyst at the Hong Kong branch of Bank of Communications Ltd., China’s fifth- biggest lender. “The dollar’s general weakness also contributes to the yuan’s rally.”

‘Not intervening’

Indonesia’s rupiah advanced after Senior Deputy Governor Darmin Nasution said Bank Indonesia is “not intervening” to stem gains in the currency. The tendency of the rupiah is to strengthen at a slow pace, he said in Jakarta late yesterday.

“The overall landscape for risk taking is improving, funds are searching for high-yielding investments and the rupiah falls into this,” said Thio Chin Loo, a senior currency analyst at BNP Paribas SA in Singapore.

Foreign investors purchased more local shares than they sold this week in Korea, Indonesia, Taiwan and Thailand, according to stock exchange data compiled by Bloomberg News.

Malaysia’s ringgit halted a two-week slide after the Paris- based International Energy Agency said daily oil demand could average 85.7 million barrels in 2010, higher by 450,000 barrels than it estimated in August. Malaysia is a net oil exporter.

Taiwan’s dollar climbed as high as NT$32.600, the strongest level in three months, after President Ma Ying-jeou said he will refocus on a trade accord with China to boost cross-strait ties, saying the island’s economy will return to growth at year-end.

“China is crucial to regional trade, especially with weaker demand from the U.S.,” said Lam Chee Mun, who helps manage about $200 million at TA Investment Management Bhd. in Kuala Lumpur. “Oil should support commodity currencies, and to some extent, the ringgit.”

Elsewhere, the Singapore dollar appreciated 1.1 percent to S$1.4224 from a week earlier. Thailand’s baht advanced 0.2 percent to 33.97 and the Philippine peso gained 0.8 percent to 48.28 per dollar. Vietnam’s dong traded at 17,831 versus 17,824 a week ago.

Source: Bloomberg