Further helping the local currency, and sentiment about the Australian economy, Australian house prices saw the first monthly rise in a year in November, buoyed in part by the first cut in interest rates from the Reserve Bank of Australia since early 2009. For November, the RP Data-Rismark capital city home value index rose 0.1 per cent from October, the first increase since 2010.

"Today's data shows tentative signs that house prices are responding to the RBA's modest policy easing, which, along with better affordability, should lend support to house prices," said Alvin Pontoh, an economist with UBS.

A decline in property prices across Australia in 2011 has been one of the largest concerns among foreign holders of Australian assets, including the local currency. More broadly, however, it was US initial jobless claims registering the fourth week in a row below 400,000, and data showing the number of Americans signing contracts to buy existing homes increasing to its highest level in 19 months, that gave the biggest push to risk-sensitive assets such as the Australian currency.

At 3.15pm (AEDT), the Australian dollar was trading at $US1.0143, up from $US1.0085 late yesterday. Against the Japanese yen, the Australian currency changed hands at Y78.715, up from Y78.454.  At its current level, traders noted the currency could have some difficulty going much higher against the US dollar, with resistance firm at $US1.0145.

In the most anticipated report of the day, the Australian dollar was little changed by the final HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, which rose to 48.7 in December, compared with 47.7 in November. Despite the slight rise in the PMI, it remains in contraction territory.

Also of note for the local currency and fixed income markets, data from the RBA showed credit to the Australian private sector rose a seasonally adjusted 0.3 per cent in November from October. Total credit growth has been mildly positive since the middle of the year, though some parts of the credit market look likely to face a slowdown in 2012, said Michael Turner, a strategist with RBC in Sydney.

"With demand for credit from the business sector unlikely to pick up in 2012, credit growth is set to remain weak into 2012," Mr Turner said.

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The world’s biggest major-currency decline is benefiting South Africa’s largest companies as export earnings in dollars rise and commodity producers from AngloGold Ashanti Ltd. to Sasol Ltd. beat peers in the stock market.

The rand has fallen 19 percent this year to trade at 8.30 per dollar, the biggest slump among the 12 most-traded currencies tracked by Bloomberg, as Europe’s sovereign debt crisis led to a selloff in riskier assets. It may retreat 3.7 percent to 8.50 per dollar by the end of the first quarter, according to the median estimate of 25 analysts surveyed by Bloomberg.

South Africa’s Reserve Bank let the rand sink 15 percent against the dollar in the past four months after the currency’s advance to a four-year high in April led Trade & Industry Minister Rob Davies to say it was “overvalued’ and ‘‘debilitating’’ for manufacturers. Gold producer AngloGold Ashanti gained 8.3 percent since Sept. 1 as the rand’s drop increased the local-currency value of gold. Sasol shares rose to a 40 percent premium to the FTSE 350 Oil & Gas Producers index.

‘‘It’s been very beneficial for these types of companies, like Sasol, where the rand oil price is the big driver,” Greg Katzenellenbogen, a director of Sanlam Private Investments in Johannesburg, which manages $7.5 billion, said in a Dec. 14 phone interview. “For shareholders, certainly from an earnings point of view, it can lessen the pain that a weaker currency brings in other aspects of life, such as higher inflation.”

Rand Decline
The South African rand is the world’s third-worst performing currency this year, after taking into account price swings, ahead of only the Argentine peso and Indian rupee, data compiled by Bloomberg show. Non-deliverable forward contracts, which provide a guide to investors’ expectations of currency and interest rate moves, show the rand extending its decline to 8.56 per dollar in 2012. The rand traded at 8.15 per dollar as of 9:54 a.m. in Johannesburg.

Sasol, the largest South African company by revenue and provider of 40 percent of the nation’s motor fuel, posted net income of 19.8 billion rand ($2.4 billion) in the fiscal year ended June 30, up from 15.9 billion rand the year before. Earnings in the six months through December may rise by at least 45 percent from a year ago, the Johannesburg-based company said in a Nov. 30 stock exchange statement, adding that it is “well- positioned” to increase profit in fiscal 2012 as the weaker rand compensates for slowing global growth. The rand’s decline “positively impacted” revenue in all the company’s divisions, Chief Financial Officer Christine Ramon said in the statement.

Operating Profits
Annual operating profits rise 946 million rand ($118 million) for every 10 cents the rand loses, Sasol said. Sasol shares have climbed 13 percent to 383.32 rand since the beginning of September.

“The majority of our turnover is denominated in dollars or significantly influenced by the rand-dollar exchange rate,” Jacqui O’Sullivan, a spokeswoman for the company, said in an e- mailed response to questions from Bloomberg. “Therefore, the average exchange rate for the year has a significant effect on our operating profit.”

Sasol takes out forward-currency contracts to protect against swings in the rand, O’Sullivan said. All major capital expenditure in foreign currency is hedged through forward contracts immediately after approval of a project, while import costs in excess of $50,000 are also hedged, she said. A forward contract is an agreement to buy or sell a currency at an agreed price at a specified future date.

Aluminum Exporters
“This policy enables us to more accurately forecast our cash outflows for purchases of both capital items and operating materials,” she said.

For Hulamin Ltd., Africa’s largest maker of fabricated aluminum products, every one-rand weakening in the dollar-rand exchange rate over a full year adds as much as 200 million rand to profits, according to Chief Financial Officer Charles Hughes. More than 60 percent of the Pietermaritzburg-based company’s sales revenue is earned outside of South Africa. The stock has climbed 13 percent since the beginning of September.

“The average exchange rate for 2011 is still going to be at the stronger end of the scale rather than weaker, but the weakening of the rand in the last quarter will benefit our results for sure” Hughes said in a Dec. 21 phone interview from Pietermaritzburg. “For 2012, if it remains above 8 rand, it will have a significant effect on our profits.”

Gold Mines Index
AngloGold Ashanti, the largest African gold producer, said in November that the falling rand helped drive third-quarter profit excluding one-time items to a record $457 million, or $1.18 a share, from $342 million, or 89 cents, in the prior quarter. AngloGold shares rose 1.5 percent this quarter to 344.03 rand. Its gain since September came as the FTSE Gold Mines Index slid 15 percent.

While exporters and companies dependent on substantial foreign earnings are benefiting from the rand’s decline, those more reliant on imports or domestic sales are seeing profits fall after the weaker rand pushed costs higher. South Africa’s annual inflation rate rose to 6.1 percent in November, breaching the central bank’s target range for the first time in almost two years.

“Domestic companies like retailers will be the worst off,” Rhynhardt Roodt, an analyst at Investec Asset Management in Cape Town, said in a phone interview on Dec. 15. “If you have the view the rand will weaken, you’ll import a lot more inflation. Companies with large foreign shareholdings will also be exposed as foreign investors sell their shares.”

Raw Materials Inventories
Adcock Ingram Holdings Ltd., Africa’s largest over-the- counter drug company, reported a 19 percent rise in profit to 754.3 million rand for the 12 months through September, benefiting from a strong rand, which averaged 6.98 per dollar for the period, cutting the price of imported raw materials. Those costs are set to rise as the rand declines, Chief Executive Officer Jonathan Louw said in a statement on Nov. 22.

The company increased its raw materials inventories while the rand was strong, and is now buying forward exchange rate contracts to help protect against further declines. The company’s shares have dropped 4 percent since June 7, when they reached a six-month high.

Finance Minister Pravin Gordhan in October trimmed his forecast for growth in Africa’s biggest economy this year to 3.1 percent from 3.4 percent, and lowered next year’s estimate to 3.4 percent from 4.1 percent. South Africa’s economy expanded an annualized 1.4 percent in the third quarter as manufacturing and mining output slumped.

Deficit Widens
The current account deficit widened to an 18-month high in the third quarter as the cost of imports rose faster than the value of exports, the central bank said Dec. 8. Manufacturing growth eased to 1 percent in October from 8.1 percent the month before, according to Pretoria-based Statistics South Africa, missing the 5.7 percent median estimate in a Bloomberg survey of 12 economists.

The worsening debt crisis in Europe, which buys 30 percent of South Africa’s manufactured goods, has also sapped demand for exports. That may persuade the Reserve Bank, led by Governor Gill Marcus, to keep its benchmark interest rate unchanged at a 30-year low of 5.5 percent until the end of the second quarter, according to nine out of 10 economists in a Bloomberg survey.

The three-month implied volatility of the rand versus the dollar climbed to 22 percent this week, from 21.9 percent last week, indicating traders of currency options see the currency’s swings widening in coming months.

Weak Currency
While the weaker rand can result in a “short-term buffer” for the economy, in the longer term it’s not a substitute for competitiveness, Razia Khan, an economist at Standard Chartered Plc in London, said in a phone interview on Nov. 30.

“There is no evidence to suggest that a weak currency on its own is going to drive lasting real economic gains for South Africa,” Khan said. “If the rand weakens because people are concerned about global growth then it’s going to be difficult for South Africa to grow market share anyway. So a weak currency is really not the answer. The context in which it happens is more important.”

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China and Japan will promote the use of their currencies for trade and investment, according to an agreement that analysts said was largely a symbolic move as it was short on details. The two Asian economies said that they wanted to reduce costs and risks for their companies – an implicit call for less reliance on the dollar, which is currently their predominant medium of exchange.

Japan also confirmed a plan to buy Chinese government bonds, which would mark the first time it has added renminbi-denominated debt to its foreign exchange reserves. Analysts said the agreement could help boost the renminbi’s role in Asia and internationally but that it was only one of the many tiny steps that Beijing has taken to elevate its currency’s status and that the dollar’s position as the world’s premiere reserve currency was safe for now.“It’s a symbolic move. Before Japan has tried to promote the yen as the only international currency for Asia, so this will be welcomed by the Chinese government,” said Shen Jianguang, an economist with Mizuho Securities.

Separately, the US Treasury on Tuesday again declined formally to name China as a currency manipulator, though it said that the pace of appreciation of the renminbi was inadequate. In its twice-yearly currency report, which it has taken to releasing at times when it is unlikely to get extensive media coverage, the Treasury continued to call for Beijing to allow more flexibility in the renminbi while saying that China’s currency regime did not meet the formal definition of manipulation. Although the “manipulation” designation has achieved symbolic political importance in the US Congress, naming China as a manipulator would merely require the Treasury to enter into negotiations with Beijing – something that Treasury officials say they are already doing in any case. While trade flows have boomed between China and Japan, their formal political co-operation has been stunted by tensions from territorial disputes to historical wounds.

Both countries said that the financial agreement, signed after Yoshihiko Noda, Japan’s prime minister, visited Beijing on Christmas day, was intended to foster greater co-operation and stability. It will, however, take time to gauge whether their pact was significant in economic terms. Although Chinese media reports made a big deal of the pledge to encourage the use of the countries’ own currencies for settling bilateral trade, this had already been possible since a reform by Beijing in mid-2010. Yet the amount of trade that has been settled between yen and renminbi has been so minimal that official statistics measuring such flows do not exist.

Chinese companies buying goods from Japan convert their renminbi into dollars to make purchases since their Japanese counterparts are still reluctant to accept the Chinese currency. Japanese companies likewise convert their yen into dollars when buying from China. The key obstacle to promoting such trade has been China’s reluctance to relax controls on its capital account, meaning that foreign companies that receive its currency have nowhere to invest it apart from the offshore renminbi base of Hong Kong.

Liang Meng, a researcher with the People’s Bank of China, acknowledged that the vow to settle more trade in renminbi would by itself change little. “It’s not like the unimpeded global flows of the dollar. To invest in China, you still have to go through intermediary channels,” he said in the commerce ministry’s newspaper.

Japan also sought to downplay its plan to purchase up to $10bn of Chinese government bonds. An unnamed Japanese official was quoted in Chinese media as saying that this was an expression of economic co-operation, not an attempt at diversification of its foreign exchange reserves. Over the past five days, China has also signed currency agreements with Thailand and Pakistan, opening bilateral swap lines worth Rmb70bn and Rmb10bn, respectively. “These are all little parts of the bigger picture of trying to internationalise the renminbi,” said Ken Peng, an economist with BNP Paribas.

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State Bank of Pakistan (SBP) and People’s Bank of China (PBC) signed the currency swap arrangement in Islamabad, announced the central bank. The agreement was signed by SBP Governor Yaseen Anwar and PBC Deputy Governor DU Jinfu.

This is the second currency swap agreement that the government has signed with any country. Earlier, Pakistan and Turkey inked a similar arrangement with an option to trade in each other’s currencies equivalent to $1 billion.

An official handout said the bilateral currency swap arrangement has been concluded in 10 billion Chinese yuan and 140 billion Pakistani rupees. The programme will expire in three years, but can be extended with mutual consent. Pakistani importers can pay for Chinese goods in local currency.

“We expect that bilateral trade and investment will grow between Pakistan and China as a result of this agreement, further augmenting economic ties between the two countries,” it added. This agreement will contribute significantly to further strengthening close and special relationship between the two countries.
The currency swap agreement will give a positive signal to the market on availability of the other country’s currency on the onshore market, said the central bank, adding as a result it will promote bilateral trade denominated in Chinese yuan and Pakistani rupee.

Arrangement raises questions
However, industry insiders suspect that China will later convert the arrangement into a loan as it has expressed little interest in trading in Pakistani currency. On the loan, it can charge mark-up at a rate more than the Shanghai interbank market rate.

The insiders said when Pakistan proposed Beijing to sign the currency swap agreement China refused to deal in Pakistani currency. They said Pakistan had also proposed China to buy its treasury bills with the swap money, but Beijing refused.

They said Pakistani importers may still have to pay in Chinese currency despite signing of the swap arrangement. Despite repeated attempts, State Bank officials were not available for comment. Total volume of bilateral trade was $7.4 billion last year, tilted in favour of China. Pakistan’s exports to China stood at $1.6 billion compared to imports worth $5.8 billion, showing a deficit of $4.2 billion, said the commerce ministry.

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Asian dollar bonds may beat domestic notes for a second year in 2012 as central banks cut interest rates to spur economic growth, curbing currency gains, UOB Asset Management Ltd. and Mizuho Securities Co. said.

The region’s global debt has returned 5.3 percent this year, compared with 5.1 percent for local-currency securities in U.S. dollar terms, HSBC Holdings Plc indexes show. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10-most traded currencies excluding the yen, weakened 1.1 percent in 2011 as Europe’s debt crisis sapped demand for emerging-market assets.

“With global growth likely to slow and several Asian central banks expected to ease monetary policy in reaction to slower inflation and economic growth, Asian currencies are unlikely to gain,” said Chia Tse Chern, co-head for Asian fixed-income at UOB Asset in Singapore, which manages the equivalent of $13.6 billion of assets. “This could depress the performance of Asian local-currency bonds in 2012.”
Indonesia is preparing to tap the international market after it was raised to investment grade by Fitch Ratings on Dec. 15. The Philippines is also planning to sell dollar bonds after its outlook was changed to positive by Standard & Poor’s the following day. Dollar notes from the Philippines and Indonesia are the best-performing in Asia in 2011, advancing 11 percent and 8.8 percent, respectively, HSBC indexes show. India’s rupee led declines in Asian currencies this year, falling 15 percent against, followed by a drop of 4.2 percent in Thailand’s baht and 3.8 percent in Taiwan’s dollar.

First Rate Cut
Bank Indonesia was the first major Asian emerging central bank to cut its benchmark interest this year, lowering it by 25 basis points in October and 50 basis points to 6 percent the following month. The Bank of Thailand followed in November, reducing its one-day bond repurchase rate by 25 basis points to 3.25 percent.

UOB’s Chia said he favors dollar debt from Indonesia and Malaysia. His United Asian Bonds Fund (OUBASIB) returned 6.2 percent in 2011, exceeding the 1.8 percent average among peers.
Implied volatility, a measure of expected foreign-exchange swings used to price options, is climbing. The one-month gauge for South Korea’s won averaged 14 percent in the second half from 10.7 percent in the first, while for Indonesia’s rupiah it was 11 percent, compared with 6.2 percent in the first half.
Foreign ownership of Indonesian rupiah debt fell 12 percent as of Dec. 20 from a record high of 251.23 trillion rupiah ($28 billion) on Sept. 9, according to finance ministry data. The amount of South Korean fixed-income securities owned by overseas investors fell by 336.9 billion won ($292 million) to 86.7 trillion won in November, the biggest drop since January, the Financial Supervisory Service said on Dec. 4.

Dollar Liquidity Better
Global funds lowered holdings of ringgit bonds by 8 percent to 171.6 billion ringgit ($54 billion) at the end of October from a record high of 186.5 billion ringgit in July, according to Bank Negara Malaysia. Foreign ownership of Thai bonds fell to 6.5 percent of the total in the week ended Dec. 16 from 10.5 percent in the last week of 2010, according to data from the Thai Bond Market Association.

“There’s less chance of gains from potential currency appreciation under the current uncertain conditions,” said Tadashi Tsukaguchi, senior fund manager at the asset-management office in Tokyo at Mizuho Securities, part of Japan’s third- largest bank. “The liquidity of the dollar as a major currency remains better,” he said, adding that he thought Asian global debt will beat local-currency bonds in 2012.
HSBC Holdings, Europe’s largest lender, recommended in a report on Dec. 14 that clients hold emerging-market hard- currency notes versus local-currency securities as policy makers seek weaker currencies to support growth. Developing economies in Asia will grow 8 percent in 2012, compared with 1.9 percent for advanced nations, according to forecasts from the International Monetary Fund in September.

Widening Spread
The yield on Asia’s dollar debt over comparable U.S. Treasuries widened to 238 basis points as of Dec. 21, compared with 165 basis points at the start of 2011, according to JPMorgan Chase & Co.’s EMBI Plus Asia Sovereign Spread index.

“The spread for the dollar bonds has expanded, increasing interest income,” said Tatsuya Higuchi, a Tokyo-based senior portfolio manager at Kokusai Asset Management Co., which oversees about $51 billion of assets. He said he favors local- currency debt from India because of its high yield, as well as such securities from Indonesia and the Philippines. Kokusai Global Sovereign Open is Asia’s biggest debt fund.

Thomas Kemmsies, the Frankfurt-based head of fixed-income at Nomura Asset Management Co., which managed $288 billion as of October, predicts Asia’s dollar debt will do better in the first half before local bonds end “marginally ahead” in 2012.

‘Policy Headroom’
“We still believe Asia, in general, has quite a lot of policy headroom to address any cyclical deceleration,” said Kemmsies, who manages the Nomura Asian Bonds Fund (MATASBO), which has advanced 4.4 percent in 2011 compared with an 0.05 percent gain among its peers. He said he favors local-currency bonds from Thailand, the Philippines and Taiwan because the relatively low foreign ownership of those notes makes them less vulnerable to sell-offs.

JPMorgan Asset Management predicts domestic Asian debt will outperform in 2012 as near-zero interest rates in the developed world push funds to seek higher yields in Asia. “We do anticipate the gradual slowing of U.S. growth will lead to more quantitative easing by the Federal Reserve and the situation in Europe will lead to further liquidity injections,” said Stephen Chang, Hong Kong-based head of Asian fixed-income at JPMorgan Asset, which oversees $1.3 trillion worldwide. “When those measures are in place, we believe Asian currencies should be outperformers.”Chang, whose JF SAR Asian Bond Fund (JFSAABA) gained 2.6 percent in 2011 compared with an average of 1.7 percent among its peers, prefers local securities from the Philippines, Indonesia and India, he said.

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The Euro slipped from its one week highs after the European Central Bank allotted 489.2 billion euros ($643.8 billion) in an auction of three-year loans today much higher than estimated, with a total of 523 bidders. The single currency had run up impressively in Asia, extending its recovery from 11-month lows to break above 1.3200-mark against the US Dollar. Bulk of the gains in the single currency stemmed from a upbeat current of economic news from US and Europe and a reversal in global equity markets.

The DOW jumped by more than 300 points and commodities rallied impressively as an upbeat wave of economic data has set stage for a long-awaited Christmas rally. The US housing sector showed signs of getting propped up after years of turmoil as housing starts jumped 9.3% in November to a seasonally adjusted annual rate of 685,000- the highest pace since April 2010. In Germany, the Ifo Institute's index business confidence improved for the second consecutive month.

Also, Spain was able to sell short-term debt at a far lower yield than in the prior month's auction, and yields on its 10-year bonds trading in the secondary market also pulled back to just over 5%. Euro gained above 1.3100 levels against the US dollar, extending bounce from 11-month lows. There were also expectations of a huge take-up of the European Central Bank's long-term financing program.

While these developments acted in favor of the Euro, some market participants wonder if the European bank use the excess amounted bowered from the ECB today to buy Italian and Spanish government debt or abide by competing pressures on them to cut risk and rebuild capital. This pulled the Euro/Dollar pair lower by more than 100 points. The pair has broken under 1.3100 threshold and currently quotes at 1.3087.

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Five of the UK's biggest banks and other credit card companies have agreed to scrap some of the fees travellers are hit with when buying foreign currency. The firms have also pledged to display other charges more clearly in their monthly and annual statements. The move follows pressure from the Office of Fair Trading (OFT), which has been investigating a super complaint from watchdog Consumer Focus. The fair deal campaigners said it believed consumers spend around £1bn a year on exchanging money.

It added that charges for using debit or credit cards overseas were unnecessarily complex and confusing, adding that phrases such as "0% commission" and "competitive exchange rates", were misleading. The watchdog pointed out that it costs banks and credit card providers an average of 9p and 37p respectively to process debit and credit card payments. But charges for buying currency with a card are typically 1.5% to 2% of the amount converted, meaning a holidaymaker trying to convert £500 into euros could be charged up to £30 to do it. Five companies, including Lloyds, Barclays and RBS, have agreed to scrap the charges. OFT chief executive John Fingleton said they are "very pleased" that the travel money industry has welcomed the changes.

"Companies should be earning profits by competing to provide the best value products and services, not through charges that are hard for customers to identify or interpret," he said. He said the new changes should reduce confusion about the charges that apply when buying travel money in the UK or using cards overseas. "(We) hope they will allow holidaymakers to be far better informed when making choices about how they spend abroad," he said. "This should drive greater competition in the UK travel money market."
Chief Executive of Consumer Focus, Mike O'Connor, told Sky News the move to scrap debit card charges was a "great victory" for the organisation. He said: "We spend about £27bn when we travel abroad. Now it will cost you less, so the pressure is on...the banks: do it in time for summer."Mr O'Connor also called for the banks' review on 0% commission to be completed swiftly. He said: "0% commission. That is a con. They already build a commission on exchange rates."

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The rupee fell on Tuesday in light volume, weighed down by slowing domestic growth and worries the euro zone's debt crisis could spill over into the global economy and put more pressure on riskier currencies.
Many markets players were on the sidelines after the RBI slashed trading limits in the forwards market last week to curb speculation after the currency had ploughed record lows, traders said. At 10:28 a.m. (0458 GMT), the rupee was at 53.04/05 to the dollar near the day's low of 53.065. It had closed 0.3 percent weaker on Monday at 52.88/90. "The market is very quiet and illiquid after the Reserve Bank of India's moves last week," said a dealer with a foreign bank.

He said quotes between bids and ask widened to 0.06 rupee from a normal 0.01 rupee as speculation dried up. The currency should move between 52.70 and 53.20, he said, similar to the wide moves on Monday.
Last Thursday, the central bank reduced net overnight open position limit of banks to curb excessive volatility and shore up the rupee, which had hit an all-time low of 54.30. Volume has dropped sharply after the central bank's move from a normal $2 billion to $3 billion a day, traders said. The offshore non-deliverable forwards (NDFs) indicated further weakness, with the one-month rupee NDFs at around 53.56.

The one-month onshore forward dollar premium were at 38.25 points, up from 37.5 on Monday, while the three-month premium was at 100.5 from 98. The one-year premium was at 276.25 from 267.25.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX, and the United Stock Exchange were all around 53.14. Total volume was at $817 million. The main 30-share BSE index was down 0.3 percent on a gloomy growth outlook and rising foreign fund outflows. Lingering fears of regional instability after the death of North Korea leader Kim Jong-il on Saturday prompted investors to keep away from riskier assets like the euro and equities.

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City Police on Sunday claimed to have busted a counterfeit currency racket with the arrest of six members and seized fake Indian currency notes of varying denominations totalling Rs 1.33 lakh. The sleuths of commissioner's task force, North Zone, seized the fake currency of denominations of Rs 1000, Rs 500 and Rs 100 besides an HP colour printer, one CPU and seven cellphones, from the accused, police said.

Founder of the gang, identified as B Murari Goud used to print counterfeit currency notes with the help of two members, namely Jayaram and Krishna, in his house and circulate the same through his associates, they said. Jayram and Krishna are currently at large and efforts are on to nab them. All the six members are accused of indulging in preparation and circulation of counterfeit currency. The police closely monitored the activities of organised crime in their jurisdiction and in this process laid a trap and busted the gang, they added.

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Emerging Asian currencies slid on Thursday as investors rushed into safe assets before year-end on expectations for further losses as the euro zone's debt crisis continues. The Indian rupee hit a record low against the dollar for a fourth consecutive session and the South Korean won stepped closer to technical support.

However, some Asian foreign exchange authorities were suspected of intervening to slow the slide in their currencies. On Wednesday, Italy's funding costs hit a new euro era record at a bond auction, while Germany's chancellor and central banker rebuffed pressure for the European Central Bank to intervene decisively. Adding to worries about the global economy on Thursday was a private survey showing that China's factory output is expected to shrink in December.

The gloomy pictures hit stocks and commodities, with the euro touching a 11-month low and the Australian dollar at a two-and-a-half week low. "On charts for major currencies such as the euro and Australian dollar, critical levels have been broken. It is the turn of emerging Asian currencies now," said a senior dealer at an Asian bank in Kuala Lumpur. The dealer said most of the regional units are at risk of weakening past their support.

Most emerging Asian currencies are poised to report losses for the year, thanks to the long and persisting worries about the euro zone's debt crisis. The rupee has led the slide, having fallen 17.6 percent versus the dollar this year.

RUPEE NDF

The spread between one-year dollar/rupee and one-month dollar/rupee jumped to the highest in nearly eight months, indicating further weakness in the currency. Dollar/rupee touched a record high of 54.30 as investors grew increasingly bearish about the outlook for both the domestic and global economies, raising the prospect of further capital outflows from emerging markets. But some offshore traders said they spotted the central bank selling the pair around the session's high.

WON

Offshore funds and South Korean importers bought dollar/won , pushing the pair to near a technical resistance line at 1,164.8, the high on Nov. 25, although its upside was capped by exporters' supplies.

If the resistance is cleared, dollar/won may head to 1,180.4, the 76 percent Fibonacci retracement of its slide in October. Dealers in Seoul and abroad suspected dollar-selling intervention by foreign exchange authorities, although the amount was not large, given subdued trading. Foreign sold a net 290.6 billion won ($251.33 million) in Seoul stocks while buying a net 274.5 billion won in treasury bond futures.

BAHT

Dollar/baht is expected to rise to 31.44 after it breached the 76.4 percent retracement of its slide between late November and early December. Earlier, Japanese banks sold the pair, which dealers said probably was linked to re-insurance for those affected by floods, but foreign banks chased it later. Dealers in Bangkok are also looking to buy the pair on dips. "I prefer to buy USD on dips until the year-end," said a Bangkok-based dealer, on expectations for dollar demand for repatriation by foreign investors. Foreigners were net sellers in the Thai stock market during the previous three sessions.

PHILIPPINE PESO

Dollar/Philippine peso gained but it gave up some of the rises as the central bank was spotted selling the pair. Investors reduced long positions after the release of data showing remittances in October rose to a new peak.

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