Regional currencies have mixed fortunes in trading<\/p>\n
SINGAPORE (Dow Jones): Southeast Asian currencies turned in a
\nmixed performance against the U.S. dollar during Asian trading
\nyesterday, with the Singapore dollar and ringgit both dropping,
\nwhile the baht and the rupiah floated higher.<\/p>\n
Meanwhile in North Asia, the downward pressure on the yuan and
\nthe Hong Kong dollar eased somewhat. The forward premium on the
\nU.S. dollar dropped back slightly against both currencies after
\nthe Hong Kong government was detected intervening to support the
\nstock market for the second time in a week.<\/p>\n
The Philippine peso also strengthened, while the easing of
\nspeculative pressure on China and Hong Kong, coupled with a run-
\nup in the yen, bolstered both the South Korean won and the new
\nTaiwan dollar.<\/p>\n
Once again the Singapore dollar showed itself the most
\nimmediately vulnerable of the regional currencies, sinking
\nagainst the U.S. currency during the afternoon on sales from
\nLondon-based market participants, according to traders.<\/p>\n
Having outperformed every freely-floating currency in Asia
\nsince the start of the region's economic crisis, the Singapore
\ndollar is now regarded as over-valued by many traders and
\nanalysts.<\/p>\n
Reports issued Monday by J.P. Morgan and Merrill Lynch
\nrespectively predicting 11.5 percent and 1.7 percent falls by the
\nend of the year, only added to the market's bearishness towards
\nthe island republic's currency, as the U.S. dollar rose to end
\nAsian trading on Tuesday at S$1.7689, up from S$1.7608 late
\nMonday.<\/p>\n
With flush liquidity in the Singapore money market keeping
\nSingapore dollar interest rates consistently below equivalent
\nU.S. dollar rates, few market players hesitate to forecast
\nfurther falls in the local currency.<\/p>\n
Late on Tuesday the three-month Singapore dollar interbank
\nrate was offered at 5.00 percent, significantly below the
\nequivalent U.S. dollar Singapore interbank offer rate of 5.6875
\npercent.<\/p>\n
The weakness of the Singapore dollar contrasts starkly with
\nthe relative stability of the ringgit, sustained despite the
\nmarket's deep-rooted pessimism on the Malaysian economy and
\ncurrency.<\/p>\n
Although the ringgit dropped on Tuesday, with the U.S. dollar
\nrising to 4.2350 ringgit from 4.2272 ringgit late on Monday, high
\noffshore interest rates and a ballooning current account surplus
\nare helping to support the Malaysian currency, say analysts.<\/p>\n
\"In the first quarter of the year the (Malaysian) current
\naccount surplus was 9 percent of GDP. In the second quarter it
\nwill be closer to 15 percent,\" predicted Prasenjit Basu, regional
\neconomist at CS First Boston in Singapore.<\/p>\n
Although Basu acknowledges that sentiment towards the ringgit
\nremains precarious, he argues that the huge imbalance in fund
\nflows created by collapsing Malaysian imports is capping the
\ndollar around current levels.<\/p>\n
Although not as bold in their forecasts as Basu, other
\nanalysts agree with this view.<\/p>\n
On the Philippine Dealing System, the peso rose in line with
\nthe general Asian trend. At the close of trading, the U.S. dollar
\nwas quoted at 42.85 pesos, down significantly from Monday's
\nclosing level of 43.25 pesos.<\/p>\n
In the spot market, the Hong Kong dollar edged higher in
\nresponse to the authorities' action to support the stock market,
\nwith the U.S. dollar dropping to HK$7.7490 from HK$7.7498. In the
\nforward market the Hong Kong dollar interest rates implied by
\nHK$\/US$ forward premiums eased, with the implied three-month rate
\ndropping to 12.30 percent, from 12.92 percent the day before.<\/p>\n
Although the U.S. dollar inched one point higher against the
\nyuan in the spot market, ending trading at 8.2799 yuan (CNY)
\ncompared with CNY8.2798 on Monday, sales of the Chinese currency
\nin the offshore non-deliverable forward market eased somewhat.<\/p>\n
Late in Asia the yuan interest rate implied by the three-month
\nUS$\/CNY NDF rate stood at 18.73 percent, down from 19.22 percent
\nthe previous day.<\/p>\n
Against the South Korean won, the U.S. currency ended at 1,319
\nwon, down from Monday's close of 1,333 won.<\/p>\n
Against the Taiwanese currency, the U.S. dollar ended the
\nsession lower at NT$34.734, compared with Monday's close of
\nNT$34.761.<\/p>",
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