SINGAPORE -- The Taiwan dollar hit its highest since Oct. 1997 and the South Korean won rose as much as 2.0 percent as investor appetite for Asian currencies returned after improved US housing data and a rally in stock markets.

The Taiwan dollar rose 0.4 percent to hit 30.0950, touching a 10-1/2-year high for the second consecutive day as fund inflows buoyed the local currency, and despite the central bank's heavy verbal intervention on Monday.

"Though the CBC (central bank) was evident in the market persistently leaning against the dollar/Taiwan dollar decline, policy action remains only to smooth rather than reverse the spot market descent, especially in a backdrop where real money inflows are strongly supporting the currency," a JPMorgan note said.

The weekend's presidential elections won by a candidate promising closer trade ties with China also helped boost the Taiwan dollar, which has gained 2.5 percent in the past week.

Other currencies, including the Indonesian rupiah and Singapore dollar also rose as market sentiment improved after a mixed Asian performance in the previous session.

An increased JPMorgan offer for Bear Stearns triggered a rally in US stocks overnight and Asian stock markets followed suit with MSCI's measure of equities in Asia excluding Japan rising by 2.7 percent.

The Korean won climbed as much as 2.0 percent to a 12-day high of 976.60 per dollar due to renewed investor interest in riskier assets.

The won also gained support from data showing foreign investors have turned net buyers of Korean stocks after a long spell of selling, and by the central bank chief's comments on the need for higher interest rates to tackle a growing current account deficit.

The Indonesian rupiah rose by 0.3 percent to 9,180 per dollar. Traders said banks and firms were due to make annual tax payments to the government on Tuesday, and that was draining rupiah supplied from the money market and causing banks to borrow dollars and sell them to raise the local currency.

"Overnight money market played up to 9.00/11.00 percent. I expect the central bank will step in to pour rupiah and stabilize the rate" a trader in Jakarta said.

However, the Thai baht once again bucked the regional trend and fell 0.8 percent to a 3-1/2-week low of 31.720 because of higher demand for US dollars from Japanese banks closing positions for the approaching fiscal year-end.