Asian currencies mostly down; baht hits new 10-month low<\/p>\n
SINGAPORE (Dow Jones): Asian currencies were mostly weaker
\nlate Monday, undermined by the dollar's strength against the yen,
\ndealers said.<\/p>\n
Concerns were increased the prospect of widening interest rate
\ndifferentials between Asian currencies and the dollar
\nSurprisingly robust U.S. second-quarter economic growth has
\nrenewed concerns that the Federal Reserve may raise rates at its
\nnext policy meeting on Aug. 22.<\/p>\n
Evidence in recent weeks pointing to an economic slowdown had
\nled the market to lower its expectations of a rate hike next
\nmonth. But now, market participants are revising their
\nexpectations, while awaiting the release of more key economic
\ndata this week. The U.S. economy grew 5.2 percent between April
\nand June, far above an expected 3.9 percent growth rate.<\/p>\n
Following last week's relentless selldown, the Thai baht
\ncontinued to bear the brunt of the region's weakness, as it
\ntumbled to a fresh 10-month low of 41.615 baht to the dollar in
\nearly trading.<\/p>\n
Heightened political anxieties ahead of Thailand's general
\nelections later this year and the central bank's unruffled
\nreaction so far to the baht's weakness have provided traders with
\nan incentive to hammer the baht.<\/p>\n
In late trading, the dollar was at 41.475 baht, up from 41.225
\nbaht late Friday.<\/p>\n
The baht will likely test technical resistance around 41.65
\nbaht-41.70 baht soon, which would be the lowest level since
\nSeptember 1999, but will initially find it difficult to break
\nbelow this level, a dealer at a U.S. bank said.<\/p>\n
"It's an important level on the chart," the dealer said.<\/p>\n
The Indonesian rupiah, the New Taiwan dollar and the South
\nKorean won were slightly lower, while the Philippine peso was
\nmarginally firmer after recovering in late trading. The Singapore
\ndollar was steady.<\/p>\n
The Indonesian rupiah had weakened earlier in the day on
\nmounting political uncertainties ahead of the country's national
\nassembly and on the weaker baht, dealers said.<\/p>\n
But the rupiah had regained some strength late in the day
\nafter the government signed a letter of intent with the
\nInternational Monetary Fund, which will pave the way for the next
\ndisbursement of funds under a $5 billion bailout program.<\/p>\n
In late trade, the dollar was at Rp 8,965, up from Rp 8,935
\nlate Friday and down from Monday's intraday high of Rp 9,030.<\/p>\n
Market participants, meanwhile, will be closely watching a
\nmeeting of the country's top political leaders, scheduled to take
\nplace Tuesday in Yogyakarta.<\/p>\n
At this stage, it is unclear if Vice President Megawati
\nSukarnoputri will attend the meeting. Her absence could scuttle
\nplans to cool political tensions ahead of the People's
\nConsultative Assembly session, which begins next Monday.<\/p>\n
Currency watchers said that while fears that Abdurrahman, more
\npopularly called Gus Dur, would lose his political grip have
\nwaned, the rupiah nonetheless appears set to yield to further
\nweakness this week as the political pressure mounts.<\/p>\n
"We have little doubt that the Indonesian risk is very high,
\nbut nevertheless probably overstated," said Bank of America in a
\nreport, following a visit by some of its analysts to Jakarta late
\nlast week.<\/p>\n
"The president should neither be voted out at the National
\nAssembly, nor should the impeachment process be set in train,"
\nthe bank said. "There will be rumors, and inflammatory statements
\nfrom both sides."<\/p>\n
"Short-term tactics suggest long dollar positions will be most
\nprofitable this week," the bank said, adding, however, that the
\ndollar will likely be capped around Rp 9,200 this week.<\/p>\n
In Manila, the dollar was at 44.825 pesos, down from Friday's
\nclose of 44.875 pesos.<\/p>\n
The New Taiwan dollar slipped on outflows of local investment
\nfunds, with Taiwan's stock market in the doldrums, dealers said.
\nThe U.S. dollar closed at NT$31.067, up from the previous close
\nof NT$31.046.<\/p>\n
In South Korea, the dollar finished at 1,116.70 won, a touch
\nhigher from Friday's close of 1,116.60 won.<\/p>\n
Against the Singapore dollar, the U.S. currency was at
\nS$1.7330, little changed from S$1.7322 late Friday.<\/p>",
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