Replies to post #40478 on S&P 500 & Nasdaq Analysis and Trends

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Asian Currencies Advance on Speculation U.S. Will Lower Rates

By Yumi Kuramitsu and Jake Lee

Nov. 23 (Bloomberg) -- Asian currencies rose, led by South Korea's won, after reports yesterday indicated U.S. growth is slowing and inflation pressure is abating, boosting speculation the Federal Reserve will cut interest rates.

Lower rates in the U.S. may make assets in the Asia region more attractive relative to dollar deposits and bonds. The yield premium investors get buying 10-year won-denominated debt over similar-maturity Treasuries widened to 34 basis points, the most in seven months, according to data compiled by Bloomberg. The U.S. dollar fell against 15 of the 16 most-actively traded currencies.

``The U.S. economy is looking weaker, and that's pushing yields down there, making Asia look more attractive,'' said Steven Chang, global markets vice president in Hong Kong at State Street Bank & Trust Co. ``Asian currencies are benefiting from that.''

The won advanced for a second day, up 0.4 percent to 930.20 against the dollar as of 12:30 p.m. local time, according to Seoul Money Brokerage Services Ltd. The Singapore dollar strengthened as much as 0.3 percent to S$1.5523, the highest since Nov. 4, 1997.

Trading volumes today will be less than normal due to public holidays in Japan and the U.S., said Chang.

U.S. Inflation, Rates

Consumers in the University of Michigan's monthly survey said they expect inflation to slow in one year while Federal Reserve Bank of St. Louis President William Pool said in an interview yesterday that economic reports suggest price increases are ``leveling off or declining.''

The Michigan survey issued yesterday showed U.S. consumers expect inflation of 3 percent in a year, compared with 3.1 percent in the October survey. The overall sentiment index slipped to 92.1 in November, compared with the median forecast of 93.3 in a Bloomberg News survey of 57 economists.

Investors see a 40 percent chance the Fed will lower its target overnight lending rate between banks at its March 21 meeting, compared with 17 percent odds on Nov. 15, according to interest-rate futures contracts.

Thailand's baht is leading gains in Asian currencies this year, up 12.3 percent, followed by Korea's won which has appreciated 8.6 percent. The Indonesian rupiah strengthened 7.7 percent and the Singapore dollar 7.1 percent in the same period.

Asian Stocks Investment

Overseas investors have been increasing purchases of the region's equities as economic growth accelerates.

Singapore's benchmark Straights Times Index of stocks and Indonesia's Jakarta Composite Index both reached records yesterday. The Philippines share index on Nov. 22 rallied to its highest in more than nine years.

The Singapore trade ministry this week raised its 2006 growth forecast to a 7.5 percent to 8 percent range from 6.5 percent to 7.5 percent previously. A report tomorrow will probably show manufacturing, which accounts for a quarter of the economy, increased 7 percent in October, based on a Bloomberg News survey.

In Indonesia, investors overseas bought $1.66 billion more equities than they sold this year and $639.9 million in the Philippines, according to data from the stock exchanges.

The baht, which last week advanced to the highest since February 1999, edged up 0.1 percent to 36.56 today. Thailand's government said Oct. 17 the economy will accelerate next year to as much as 4.8 percent, from an estimated 4.2 percent this year.

The Taiwan dollar rose 0.2 percent to NT$32.76, according to Taipei Forex Inc. Malaysia's ringgit climbed 0.2 percent to 3.6375.

Malaysia's economy may have expanded 5.5 percent in the third quarter after growing 5.9 percent in the second, a report today may show, based on the median of 20 forecasts in a Bloomberg survey.

The economy may accelerate faster than expected this year, driven by higher exports and domestic investment, Second Finance Minister Nor Mohamed Yakcop said on Nov. 20.

``I wouldn't be surprised'' if the economy exceeds the government's growth target of 5.8 percent, Nor said. ``But we're sticking to our forecast. We are confident we will achieve our target.''

To contact the reporter on this story: Yumi Kuramitsu in Hong Kong at [e-mail] ; Jake Lee in Hong Kong at [e-mail]

Last Updated: November 22, 2006 22:34 EST