The Korean currency was the best performer today in Asia outside Japan, after ruling and opposition parties agreed to reduce income and corporate taxes to spur economic growth. The economy expanded 0.5 percent last quarter, the weakest pace since 2004, a central bank report showed last week. The Taiwan dollar also climbed after U.S. President-elect Barack Obama announced the biggest public works program since the 1950s.
The won rose 1.9 percent to 1,448.30 per dollar at the 3 p.m. close in Seoul, according to Seoul Money Brokerage Services Ltd. The currency has declined 36 percent this year. The Taiwan dollar advanced 0.1 percent to NT$33.507, according to Taipei Forex Inc. Markets in Indonesia, Malaysia and Singapore are closed today for public holidays.
South Korea’s Kospi index rallied 7.5 percent as income taxes will be lowered by a total of 2 percentage points gradually from next year through 2010, the Ministry of Strategy and Finance said in an e-mailed statement on Dec. 5. The MSCI Asia-Pacific Index of regional shares climbed 4.5 percent.
The yen fell against the euro as Asian stocks rallied, giving investors confidence to increase holdings of higher- yielding assets funded in Japan’s currency. The yen fell to 119.12 per euro in Tokyo from 118.18 in New York on Dec. 5. It was little changed at 92.79 per dollar.
India’s rupee rose as much as 0.8 percent to a three-week high of 49.185 a dollar, after the central bank cut interest rates for the third time in less than two months and the government announced a 200-billion rupee ($4 billion) stimulus package. The currency extended gains into a fifth day.
The Taiwan dollar advanced after the nation’s cabinet said it will let mainland Chinese institutional investors buy the island’s shares and futures.
The Chinese yuan was little changed after China pledged to keep the currency stable, dousing speculation that policy makers are pursuing depreciation to aid exporters.
Twelve-month forward contracts, which fell by a record 3.3 percent on Dec. 1, rose for a second day as traders scaled back bets on declines in the Chinese currency after Assistant Finance Minister Zhu Guangyao said last week China will keep the yuan at a reasonable and balanced level.
The Philippine peso climbed for a second day on speculation U.S. dollar remittances from nationals working overseas are increasing three weeks before the Christmas holidays.
The local currency rose even as central bank Governor Amando Tetangco predicted that growth in remittances will slow next year as overseas Filipinos face the prospect of job cuts amid a global recession, in comments published today by the Philippine Star.