Best forecasters see Asian currencies rally

---

FOR the first time in three years, Asia will lead a rally in emerging-market currencies as rising global trade lifts the region's exports, according to the most- accurate foreign-exchange forecasters.

India's rupee will climb 5 percent in 2013 after losing 17 percent over the past two years, according to Oversea-Chinese Banking Corp Ltd, the best forecaster based on data compiled by Bloomberg News. The Philippine peso will gain 4.3 percent to its highest since 1999, said Standard Chartered Plc and Wells Fargo & Co, which tied for second. That would put them among the top-three developing-nation currencies, Bloomberg News data show.

Asia is poised to benefit as the International Monetary Fund estimates global trade will accelerate from the smallest increase in three years. Asia, which contributed to 44 percent of the world's economic growth last year, accounted for half of the top 10 currencies in 2010 as the world emerged from the worst financial crisis since the Great Depression.

"The global economy is a bit brighter compared to six months ago, so that bodes well for the export cycle in Asia," Emmanuel Ng, a strategist in Singapore at OCBC, Southeast Asia's second-largest lender, said in a January 7 interview. "We are getting signs of life out of China. It will continue to exert influence on Asian currencies."

The Bloomberg-JPMorgan Asia Dollar Index rose to 118.63 last Thursday, the highest since September 2011. Indonesia's rupiah has gained 1.6 percent against the dollar this month, the third-most among emerging-market currencies. The yuan rallied to a 19-year high of 6.2124 per dollar on Monday, while South Korea's won climbed last week to the strongest since 2011.The rupee will appreciate to 51.9 per dollar by year-end, from 54.50 yesterday, according to OCBC. The median forecast of 26 strategists was for the rupee to increase 3.8 percent to 52.5. The Philippine peso will strengthen to 39 per dollar, from 40.68 on Monday, extending its 7.6 percent rally over the past year, according to Standard Chartered and Wells Fargo.

The three banks ranked the most accurate based on six quarterly predictions through December 2012 and one annual forecast made at the end of 2011. OCBC had an average margin of error of 2.86 percent, while Standard Chartered and Wells Fargo had a margin of 2.93 percent.

Global trade

International trade will rise 4.5 percent this year, after increasing 3.2 percent in 2012, the slowest since the 10 percent contraction in 2009, the IMF data show. Exports accounted for about half of South Korea's gross domestic product and 20 percent of the Philippine's economy.

Asia's contribution to the global growth increased from 30 percent a decade ago, according to the IMF.

Rising exports will help Asia's developing economies grow 7.2 percent this year, compared with an average of 5.6 percent for emerging markets and 1.5 percent in advanced nations, according to IMF estimates released on October 9.

Asia's 9.5 percent expansion in 2010 powered the global recovery as China overtook Japan as the world's second-largest economy. The Bloomberg-JPMorgan Asia Dollar Index rallied 5.2 percent that year, the most since 1998, compared with a 4.7 percent gain in a similar gauge for Latin American currencies.

China's export growth accelerated to 14 percent in December, the most since May, as retail sales increased in the US and economic confidence rose in the euro area, its biggest trading partner. Shipments from Taiwan climbed 9 percent, from a 0.9 percent gain in November, official data showed.

"The gradual Chinese recovery, and lessening US and European risks could promote a more favorable market environment and capital flows into Asian countries," Nick Bennenbroek, head of currency strategy at Wells Fargo in New York, said in an e-mail on Thursday.

---