Baht, Pound, Euro, NZ, Aus currencies gain on USD and Yen

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Baht, Pound, Euro, NZ, Aus currencies gain on USD and Yen 
: 19 May 2009
Yen, Dollar Fall Against Euro as Stocks Gain on Bank Optimism

May 19 (Bloomberg) -- The dollar and the yen fell against the euro as rising confidence in the banking industry sapped demand for the currencies after three financial institutions applied to refund government-bailout cash.

The Japanese and the U.S. currencies fell most against the New Zealand dollar, Australian dollar and British pound as the MSCI World Index advanced for a second day.

South Korea’s won approached a seven-month high versus the dollar as equity gains spurred demand for higher-yielding emerging-market assets. The pound rose to its strongest level in five months against the dollar as banking stocks climbed.

“The correlation between the level of confidence and risk appetite is still intact,” said Neil Jones, head of hedge-fund sales in London at Mizuho Corporate Bank Ltd. “The yen accelerated declines since the announcement of U.S. banks’ ability and desire to repay funds, which boosted confidence.”

The yen weakened to 131.09 per euro as of 7:26 a.m. in New York, from 130.61 yesterday. The dollar depreciated to $1.3631 per euro from $1.3562. The dollar was little changed against the yen at 96.18, from 96.28 yesterday.

Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley applied to refund a combined $45 billion of government funds provided under the Term-Asset Relief program, people familiar with the matter said. The move would mark the biggest reimbursement to taxpayers since the program began in October.

The MSCI World Index rose 1.2 percent as every major stock market in Europe advanced and U.S. equity futures gained. The Dow Jones 600 index of European stocks climbed 1.5 percent as Deutsche Bank AG shares added 6.5 percent on investor optimism that the worst of the crisis is over.

‘Back in Favor’

“The healing in market stress continues,” Mitul Kotecha, head of global foreign-exchange strategy at Calyon in Hong Kong, wrote in a note sent to clients today. “Risk currencies moved back into favor.”

The won extended gains in the past month to 6.6 percent against the dollar, the best performance among Asia’s 10 most- traded currencies, as overseas investors bought more local shares than they sold for a third day. The won rose 0.8 percent to 1,249.25, according to data compiled by Bloomberg.

“The won is getting an early boost from an overnight rally in U.S. shares and as foreign investors continue buying local stocks,” said Jo Hyun Suk, a currency dealer at Korea Exchange Bank in Seoul.

The Taiwan dollar advanced to NT$32.864 per dollar from NT$32.994 yesterday, and Thailand’s baht strengthened to 34.41 from 34.56.

Pound’s Advance

The pound traded at $1.5487 from $1.5348, after rising to 1.5514, the highest since Dec. 18, after ICAP Plc and Marks & Spencer Group Plc posted profit that beat analysts’ estimates, spurring speculation the worst of British recession is over.

“News from the corporate front is pretty encouraging and that’s supporting the pound,” said Jeremy Stretch, a senior currency strategist at Rabobank International in London. “Markets are looking through the debris for pieces of good news and then acting accordingly.”

The Australian dollar rose to its strongest level against the dollar this year after central bank Governor Glenn Stevens said the economy is will benefit from a global recovery as interest-rate cuts drive domestic demand and a pickup in China stokes exports.

Australia “should be in a relatively good position and well placed to take part in a renewed international expansion,” Stevens said in Sydney.

The Australian dollar bought 77.62 U.S. cents from 76.58 cents yesterday, after earlier rising to 77.68 cents, the strongest level since October 2008.

German ZEW

The euro strengthened after German investor confidence rose in May more than economists forecast, jumping to a three-year high.

The ZEW Center for European Economic Research said its index of investor and analyst expectations, which aims to predict economic developments six months ahead, increased to 31.1, from 13 in April. Economists expected a reading of 20, the median of 35 forecasts in a Bloomberg News survey showed.

Losses in the yen may be tempered on speculation overseas investors will buy Japanese government bonds after Moody’s Investors Service yesterday brought Japan’s local and foreign- currency debt ratings to the same level, Aa2.

Moody’s cut the foreign-currency debt rating from Aaa and raised the local-currency assessment from Aa3, saying it can no longer assume that Japan would be more likely to repay debt borrowed in currencies other than the yen. The outlook remains stable, Moody’s said in a statement.

“This should be net positive for the yen as local-currency JGBs are considered the benchmark in global debt markets,” Ashley Davies, a currency strategist in Singapore at UBS AG, wrote in a research note today.

http://www.bloomberg.com/apps/news?pid=20601087&sid=auZt8Fu8U.TE&refer=home