Won and Singapore dollar rise

The South Korean won and the Singapore dollar hit 9-month highs against the yen on Friday, benefiting from investors' hunger for higher yields from emerging Asian currencies, which have also been lifted by inflows into regional equities. The won hit a 2-1/2-year high against the dollar for a second day on continuous inflows to the country's stock market, leading overall gains among Asian currencies versus the greenback.
Deutsche Bank said this week's equity inflows to Asia were the strongest in four months and added there was likely to be significant scope for further inflows into regional equities, which could push Asian currencies through resistance levels. Emerging Asian currencies were also expected to be supported especially against the yen, by continued policy tightening by central banks in the region as they battle to contain inflation.
The won strengthened to as firm as 13.0420 per yen, the strongest since June last year, and the Singapore dollar also gained to as strong as 1.0540 versus the yen, the strongest since the same month. Several banks have also issued recommendations to take advantage of regional differences in monetary policy direction.
Westpac recommended selling Taiwan dollars and buying the won as higher inflation in South Korea may spur the central bank to tighten more than Taiwan's central bank. "All else being equal there will be greater impetus for tighter policy in South Korea relative to Taiwan and we note that going short TWD/KRW in the 3 month NDF already generates positive carry to the tune of 4-5 percent," it said in a note.
The won strengthened to as firm as 1,091.0 per dollar, the strongest since September 11, 2008, as foreign investors continued to scoop up Seoul shares and on a lack of clear signs of intervention by foreign exchange authorities. Exporters also chased the South Korean currency. Foreign investors extended their streak of stock buying to a 13 consecutive session, the longest since October 2010.
They purchased a net 733.2 billion won ($671.4 million), the largest daily purchase since November 12, 2010. The rupiah touched a fresh four-year high against the dollar on portfolio inflows to Indonesia. The Indonesian currency strengthened to as firm as 8,692 per dollar, the strongest since May 2007, though dealers said the central bank was spotted buying dollars to check the local currency's strength.