SE Asian monies surrender gains as stocks slip back<\/p>\n
SINGAPORE (Dow Jones): A sharp correction in Asian stock
\nmarkets on Thursday cut away some of the gains made recently by
\nregional currencies.<\/p>\n
In Southeast Asia, the Singapore dollar and the Thai baht both
\nslipped back, although the Philippine peso firmed slightly.
\nIn North Asia the new Taiwan dollar lost ground, but the South
\nKorean won held its own despite a 4.7 percent drop in the local
\nstock market index, climbing to its highest level against the
\nU.S. dollar in almost 12 weeks.<\/p>\n
With Japanese financial markets closed for a holiday, and the
\nyen's exchange rate largely static through Asian hours, regional
\ncurrency dealers took their trading cues from falling equity
\nprices.<\/p>\n
Of the regional currencies, the Singapore dollar was the most
\nsorely hit.<\/p>\n
From an early intraday low of S$1.6925, the U.S. currency
\ntraded steadily higher throughout the session, finishing Asian
\nhours at S$1.7003, up from S$1.6962 late on Thursday.<\/p>\n
Despite the sell-off, many market participants remained
\nstoical, saying that Thursday's corrections in stock and currency
\nmarkets were just a temporary setback driven by profit-taking,
\nand that underlying sentiment towards the region remains
\nrelatively positive.<\/p>\n
In a couple of days, this profit-taking will have been
\ncompleted and we will see a resumption of the up-move in equity
\nmarkets. Interest rates will continue to come off and currencies
\nwill continue to strengthen. There will be no substantial
\ndepreciation,\" predicted the head of foreign exchange at a U.S.
\nbank in Singapore.<\/p>\n
\"Overall, the mood is still very temperate,\" concurred Thio
\nChin Loo, foreign-exchange market strategist at Banque Paribas in
\nSingapore. Although some traders were caught short by the U.S.
\ndollar's rally against the Singapore dollar, for the most part
\nactivity in regional foreign-exchange markets remained muted, she
\nsaid.<\/p>\n
Baht dealers agreed, reporting only modest trading volumes in
\nthe Thai currency.<\/p>\n
After falling through expected support at 37.40 baht to hit an
\nearly low of 37.37 baht, the U.S. dollar later recovered
\nsomewhat, as the regional stock market correction gathered
\nmomentum. By the end of Asian interbank trading, the U.S. dollar
\nhad clawed its way back up to 37.4325 baht, just a fraction below
\n37.4350 baht late Wednesday.<\/p>\n
Equity-market jitters failed to make a significant impact on
\nthe Philippine peso, however. Although the local stock index
\nslipped by over 1 percent, the peso remained firm, with the U.S.
\ndollar closing at 38.020 pesos, down a touch from 38.030 pesos
\nthe previous day.<\/p>\n
The Indonesian rupiah also proved resistant to regional
\nprofit-taking, as favorable yields continued to attract a trickle
\nof foreign funds to Jakarta.<\/p>\n
Late in Asian trading, the U.S. dollar was quoted at 8,335
\nrupiah, down a little from Rp 8,360 late Wednesday.<\/p>\n
The impact in North Asia was far more pronounced. In Taipei,
\nthe New Taiwan dollar dropped sharply in response to a 2.8
\npercent fall in the local stock market, as equity investors sold
\nstock to book profits from the recent equity rally.<\/p>\n
Currency traders wasted little time in liquidating long
\npositions in the local currency in response to the news that
\nforeign investors sold a net NT$495 million of Taiwanese stocks
\nWednesday.<\/p>\n
The outflow gathered pace Thursday, with foreign investors
\nselling a net NT$1.54 billion of Taiwanese equities, prompting
\nthe island's central bank to enter the market, selling U.S.
\ndollars to arrest the local currency's fall.<\/p>\n
By the close of local trading, the U.S. dollar was quoted at
\nNT$32.689, down from its earlier high of NT$32.725, but up from
\nNT$32.681 at Wednesday's close.<\/p>\n
Despite a weighty 4.7 percent drop in the Seoul stock market
\nindex, the Korean won actually rose, to end the day at its
\nhighest level since February 8, buoyed, traders said, by month-
\nend dollar sales from Korean exporters.<\/p>\n
At the close, the U.S. currency was quoted at 1,174.60 won,
\ndown from 1,175.50 won the day before.<\/p>",
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