VINACHEM

Asian currencies headed for a thirdweekly gain, led by South Korea’s won, on optimism the FederalReserve will delay any reduction in stimulus after a budgetimpasse threatened the world’s largest economy.

The Bloomberg-JPMorgan Asia Dollar Index extended itsadvance from Oct. 11 to 0.4 percent after U.S. President Barack Obama signed legislation yesterday that ended a 16-day partialgovernment shutdown and deferred funding and debt ceilingdeadlines into 2014. The “fiscal shenanigans” undermined thecase for tapering the Fed’s $85 billion in monthly bond buying,Dallas Fed President Richard Fisher said yesterday.

“The removal of the U.S. default risk added to improvingrisk sentiment,” said Hideki Hayashi, a researcher at the JapanCenter for Economic Research in Tokyo. Speculation the Fed“will not rush to reduce stimulus already gave some underlyingsupport to emerging-market assets,” he said.

The won strengthened 0.9 percent in the past five days to1,061.72 per dollar as of 12:10 p.m. in Seoul, according toprices compiled by Bloomberg. Malaysia’s ringgit climbed 0.8percent to 3.1528, Thailand’s baht gained 0.8 percent to 31.04,while Indonesia’s rupiah rose 0.4 percent to 11,323. The yuangained 0.45 percent to 6.0930, set for the best week in a year.

Global funds bought $1.7 billion more South Korean,Taiwanese, Thai and Philippine stocks than they sold this weekthrough yesterday, exchange data show.

‘Budget Fight’

Standard & Poor’s said suspending government operationswould shave at least 0.6 percent from fourth-quarter U.S. grossdomestic product growth, taking $24 billion out of the economy.The Fed shouldn’t begin reducing bond purchases because, duringthe shutdown, the government halted data used to gauge theeconomy’s health, Chicago Fed President Charles Evans, anoutspoken advocate of greater stimulus, said yesterday.

“The probability that taper will be pushed out to March ofnext year has increased,” said Igor Arsenin, Singapore-basedhead of emerging-markets rate strategy for Asia at Barclays Plc.“The budget fight can resume in December again.”

The won pared gains today, after touching a nine-month highof 1,059.8 per dollar, as authorities said they may intervene tolimit advances that threaten exports.

South Korea is monitoring foreign-exchange inflows andcurrency movements to see whether there are speculativeactivities, Finance Ministry Director Kim Seong Wook said bytelephone today. The Bank of Korea will take steps to ensuremarket stability, including injecting liquidity and changingrules on capital flows, if needed, it said in a report toparliament today.

“Authorities are giving a strong signal that they may stepin as the won rises to near 1,060,” said Jude Noh, the chiefcurrency trader at Suhyup Bank in Seoul.

China Growth

The yuan touched a 20-year high as data showed China’seconomic expansion accelerated in the third quarter. ThePeople’s Bank of China boosted the currency’s daily fixing by0.1 percent to 6.1372 per dollar, the strongest since a peg tothe greenback ended in 2005. Gross domestic product rose 7.8percent in the three months through September, from 7.5 percentin the previous quarter, official figures showed today.

“China’s economic growth is strong and that translatesinto further yuan appreciation pressure,” said Daniel Chan,director at China Silver Global Investment Consultant Ltd. inHong Kong.

The yuan reached 6.0915 per dollar today, China ForeignExchange Trade System prices show, the strongest level since thegovernment unified the official and market exchange rates at theend of 1993.

Elsewhere in Asia, Taiwan’s dollar advanced 0.3 percent toNT$29.395 against the U.S. counterpart and the Philippine pesogained 0.2 percent to 43.080. India’s rupee fell 0.1 percent to61.11 and Vietnam’s dong declined 0.1 percent to 21,110.