Asian currencies strengthened, lifting the Bloomberg-JPMorgan Asia Dollar Index from a two-week low, on speculation exporters were taking advantage of recent depreciation to repatriate income.

The Taiwan dollar yesterday reached a seven-month low and the Thai baht its worst level in 12 weeks, as Europe's debt crisis dimmed the outlook for Asian exports and sapped demand for riskier assets. Federal Reserve Chairman Ben S. Bernanke said the U.S. economic recovery is progressing at a "moderate" pace, easing concern global demand will slump as European governments tighten their purse strings to plug budget deficits.

"Exporters are still keen to sell the dollar on its rallies," said Paisarn Lertkowit, a currency trader at Bangkok Bank Pcl, the country's biggest lender. "If the economy in the U.S. keeps growing at a moderate pace, we may see a rebound in the jobs market, boosting consumer spending. That is good for Asian exports."

South Korea's won advanced 0.2 percent to 1,233.48 per dollar as of the 3 p.m. close in Seoul, after yesterday tumbling 2.7 percent, and India's rupee gained 0.1 percent to 47.065, according to data compiled by Bloomberg. The Asia Dollar Index, which tracks the region's 10 most-traded currencies excluding the yen, rose 0.2 percent to 109.70. The MSCI Asia-Pacific Index of shares climbed 0.4 percent.

Given the depth of the recession, the recovery is "moderate paced," Bernanke said late yesterday in Washington. Luxembourg Prime Minister Jean-Claude Juncker yesterday said euro-region finance ministers vowed to raise taxes or cut spending next year.

Eoin Treacy's view The Asian Dollar Index has formed a larger correction and broken its progression of rising reaction lows, marking a major deterioration of the medium-term uptrend's consistency. The most recent range encountered resistance in the region of the 200-day MA and a sustained move above 111 would now be required to convince investors that the demand story has regained dominance.

Longer-term, the consistency of the US Dollar's decline against many Asian currencies broke down, with the 2008 advance forming a larger rally. The post-crisis market is more volatile and prone to large currency swings. However, the current focus of investor anxiety is centred on Europe and to a lesser extent on China rather than Asia generally. Investors are currently seeking the safe haven of the US Dollar and the USA's financial markets are relative beneficiaries of this move. However, the robust growth, capital and current account surpluses and growing middle class of many Asian countries are sound reasons not to dismiss them and to view any significant pullback as a medium-term buying opportunity. Meanwhile, we will continue to let the charts be our guide.