Asian currencies down as stock market falls

Asian currencies down as stock market falls

SINGAPORE (Dow Jones): The drubbing on regional stock markets
continued to push Asian currencies lower late Tuesday.

However, while a recovery in the yen provided a mild respite
for some currencies in late trading, faltering investor
confidence in the Philippines sent the peso reeling to a fresh
19-month low.

The peso will likely remain frail as long as the conflict in
the southern island of Mindanao between government military
forces and Muslim rebels remains unresolved and bombings in
Manila continue to raise concerns over national security, market
observers said.

"It's difficult to envisage any significant improvement in the
short term," Bank of America strategist Simon Flint said.

The dollar closed at 42.370 pesos on the Philippine Dealing
System, up 46 centavos from Monday's close of 41.915 pesos.

Earlier in the session, the dollar climbed to a fresh 19-month
high of 42.375 pesos, its highest level since hitting 42.560
pesos Oct. 23, 1998.

The drop in the peso helped erode the Thai baht, although the
Japanese yen's strength late in the day stemmed the Thai
currency's fall, they added.

The dollar was at 39.275 baht, up from 39.000 baht late
Monday.

"There was a lot of outright selling interest in the baht -
buying in dollars, selling in the baht and bidding for baht
swaps," the dealer at the Asian bank said. "People are concerned
because of the outflow of the baht, due to the falling stock
market and the problems in the Philippines."

Investors are also awaiting news from the central bank's
monetary policy board, which is holding its first meeting late
Tuesday.

Bank of Thailand has adopted a flexible inflation-targeting
monetary policy framework, and the target range for inflation may
be set at the meeting. The upward limit of the inflation target
is expected to be around 4 percent.

Other Asian currencies felt the brunt of regional stock market
weakness, dealers said. However, the currencies regained some
lost ground as the yen strengthened in late trading, they added.

The South Korean won ended at its lowest level against the
U.S. dollar in nearly 13 weeks as share prices on the Seoul stock
market continued their recent downward spiral.

The dollar finished at 1,134.40 won, up from Monday's close of
1,130.60 won its highest finish since Feb. 25, when it closed at
1,136.60 won.

Against the Indonesian rupiah, the dollar rose to Rp 8,445,
from Rp 8,318 late Monday. The rupiah fell in line with other
regional currencies and as local companies bought dollars to
service debt, dealers said.

Due to the weakened rupiah, Indonesia's domestic inflation
rate is expected to creep up in May but will likely be capped
below 2 percent, State Statistics Bureau Chief Sugito Suwito said
Tuesday.

"If the rupiah weakens to Rp 12,000 (against the dollar), then
inflation would be 2 percent, but the rupiah is unlikely to fall
this far," Sugito said.

The decline in the Taiwan stock market and political tensions
with China lifted the U.S. dollar, which closed at NT$30.749,
from Monday's close of NT$30.709.

It was the second straight session of decline for the local
dollar since the island's new government was sworn in Saturday.

Dealers said the central bank tried to limit the fall of the
local dollar to around the NT$30.75 level, but offshore demand
for U.S. dollars ran high because of its strength against
regional currencies.

Against the Singapore currency, the U.S. dollar was at
S$1.7319, up from S$1.7277 late Monday.

Dealers said they expect the Singapore dollar to continue its
descent in coming days, although one said further declines could
provoke intervention by the Monetary Authority of Singapore at
the level of S$1.7350.