Asian currencies down in late trading

Asian currencies down in late trading

SINGAPORE (Dow Jones): Most Asian currencies drifted lower late Thursday, relinquishing their earlier gains as relief over signs the U.S. Federal Reserve could pursue a less aggressive monetary policy faded away, dealers said.

U.S. consumer price index data unveiled overnight added to recent evidence the U.S. Federal Reserve could wait until August before raising interest rates again.

Consumer prices rose just 0.1 percent in May after being unchanged in April. When the volatile food and energy components are removed, consumer prices advanced 0.2 percent.

There wasn't much either to inspire Asian currencies on the domestic front.

Even the South Korean won shrugged off a landmark agreement between the two Koreas aimed at easing tensions and boosting economic ties.

Instead, the won was eroded by a 5.9 percent plunge in the local stock market, dealers said. Institutional investors had bailed out of their positions following their recent buying spree on the local bourse, dealers said.

After remaining stuck within a narrow 1.1 won band in listless trading, the dollar finished at 1,115 won, up from Wednesday's close of 1,114.20 won.

Iris Teo, an analyst at Standard & Poor's MMS International, said that unless the agreement results in something more concrete, "the won will be stuck in range-bound trade." She added that the dollar will likely remain sandwiched between 1,110 won and 1,120 won over the coming week.

Some dealers also attributed the won's weakness to "hasty" concerns that increased economic aid to North Korea or reunification, albeit a remote prospect at the moment, could prove a heavy fiscal burden for the South. Analysts, however, said South Korea should benefit from the reduced military threat from the north and this could bode well for its credit ratings.

In offshore trading, the rupiah broke the Rp 8,500 resistance against the dollar earlier in the day on higher domestic rates and expectations an upgrade in Indonesia's sovereign long-term foreign currency rating could be imminent.

Standard & Poor's Corp. is expected to upgrade Indonesia's sovereign long-term foreign currency rating to either CCC or B from "selective default," once the country reaches its final agreement on restructuring commercial sovereign debt via the London Club of commercial creditors.

At 0840 GMT, the dollar was at Rp 8,540, up from Rp 8,510 late Wednesday. The dollar had fallen to as low as Rp 8,478 in early trading.

In Thailand, the dollar rose to 39.005 baht, from 38.960 baht late Wednesday on commercial demand for dollars, dealers said.

The Philippine peso closed lower against the dollar in thin trading Thursday, weighed by the Thai baht and as banks held on to long U.S. dollar positions, dealers said.

The dollar closed at 42.535 pesos on the Philippine Dealing System, up from Wednesday's close at 42.420 pesos.

The New Taiwan dollar slipped against its U.S. counterpart amid equity fund outflows and U.S. dollar-buying by importers, analysts said.

Also pressuring the local dollar was continued dollar-buying by some state-owned enterprises to pay their overseas vendors and suppliers before the end of the second quarter, analysts said.

The U.S. dollar traded at NT$30.828, up from NT$30.815 at Wednesday's close.

Bucking the region's weakness, the Singapore dollar edged higher, buoyed by strong commercial demand at just below the S$1.7200 level against the U.S. currency, dealers said.

Technical traders were, however, keen to sell the U.S. dollar around S$1.7220 to S$1.7240, capping its ascent, dealers said, adding that the dollar will likely continue to hover around S$1.7180 to S$1.7230 in the short term.