Asian currencies mostly up late, caution ahead of Fed rate policy<\/p>\n
SINGAPORE (Dow Jones): Most Asian currencies were higher late
\nTuesday, as caution prevailed ahead of an anticipated interest
\nrate cut by the U.S. Federal Reserve and the release of key U.S.
\neconomic data this week, dealers said.<\/p>\n
The New Taiwan dollar, the South Korean won, the Singapore
\ndollar and the Indonesian rupiah were stronger, while the Thai
\nbaht and the Philippine peso were weaker.<\/p>\n
The Indonesian rupiah closed slightly higher on Tuesday in
\nthin trade as participants remain cautious ahead of expected
\nantigovernment demonstrations later this week.<\/p>\n
The dollar closed at Rp 9,435, down from Rp 9,450 at Monday's
\nclose.<\/p>\n
\"Until there's some unexpected development, riots or
\nsomething, I think Rp 9,420 to Rp 9,470 is the range,\" said one
\nforeign bank trader.<\/p>\n
Threats to Wahid's 15-month presidency continue to keep
\npressure on the rupiah.<\/p>\n
But new foreign exchange laws which make it difficult for
\noffshore investors to get hold of rupiah meant few foreign banks
\nare taking positions.<\/p>\n
Most are concerned the new laws - which ban the lending of
\nrupiah offshore - will make it very difficult to fund speculative
\nlong-dollar positions.<\/p>\n
While most of these currencies had found solace from the yen's
\ngains in early trading, the market was left directionless late in
\nthe day as the Japanese currency languished in a narrow range
\nahead of the Federal Open Market Committee's two-day meeting on
\ninterest rate policy which starts Tuesday, dealers said. The Fed
\nwill also unveil data on fourth quarter economic growth.<\/p>\n
Dealers said Asian currencies have largely priced in a half
\npercentage point cut in U.S. interest rates this week.<\/p>\n
\"If the Fed doesn't deliver the 50 basis-point cut, the market
\nwill be disappointed,\" said Thio Chin Loo, a regional currency
\nstrategist at BNP Paribas Group.<\/p>\n
A half percentage point cut in U.S. interest rates could offer
\nshort-term relief for Asian markets, especially for the
\ncurrencies of Taiwan and South Korea. Their export-oriented
\neconomies are highly vulnerable to the U.S. economic slowdown.<\/p>\n
The New Taiwan dollar Tuesday finished at its highest level
\nsince Nov. 18, at NT$32.435 against the U.S. currency, compared
\nwith Monday's close of NT$32.525, in heavy dealings valued at
\nUS$967.5 million.<\/p>\n
The South Korean won found support from dollar-selling by
\nexporters, dealers said. The dollar finished at 1,265 won, down
\nfrom Monday's close of 1,267.1 won.<\/p>\n
Some analysts said the recent gains in the two North Asian
\ncurrencies will likely be transient.<\/p>\n
\"We may be at the bottom of the down cycle, but I don't think
\nthe rally will be sustainable yet,\" said Chi Lo, regional head of
\nresearch at Standard Chartered Bank in Hong Kong.<\/p>\n
In Taiwan, political uncertainties still loom - including a
\nprolonged dispute between the government and opposition
\nlegislators over whether to resume the construction of the
\nisland's fourth nuclear plant.<\/p>\n
\"For Korea, there are signs that the government is doing more
\non reforms, but there are also conflicting signals that they are
\ntrying to bail out the bad companies,\" said Lo.<\/p>\n
Lo added that it is still \"six months away\" before a sustained
\nturnaround in these two North Asian currencies would take place.<\/p>\n
The \"worsening debt dynamics\" in South Korea and Taiwan - with
\nnominal gross domestic product growth falling below nominal
\ninterest rates - will also weigh on their currencies, Lo said.<\/p>\n
Against the Singapore dollar, the U.S. currency was at
\nS$1.7471, down from S$1.7486 late Monday.<\/p>\n
In the Thai currency market, the dollar was at 42.655 baht, up
\nslightly from 42.635 baht late Monday.<\/p>\n
On the Philippine Dealing System, the dollar closed at 49.600
\npesos, up from 49.480 pesos Monday.<\/p>",
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