Asian currencies down late on yen, some hit multi-month low

Asian currencies down late on yen, some hit multi-month low

Nirmala Menon, Dow Jones, Singapore

A weak yen drove Asian currencies lower late Wednesday, with some
revisiting multiple month lows and breaching key barriers in the
process.

The U.S. dollar continued its upward momentum against the yen
in Asia, buoyed by the Dow Jones Industrial Average's 4.6 percent
overnight surge.

The Singapore currency sank to yet another fresh three-month
low for the third straight session as U.S. and local banks
covered short U.S. dollar positions, traders said.

The local unit continued to be dogged by rumor, including
speculation the Monetary Authority of Singapore would widen the
currency's trading band, implying a preference for a weaker
currency.

Concerns about a capital outflow persisted, fueled by
speculation Morgan Stanley Capital International would re-weight
Singapore stocks in its portfolio.

Currency strategists and dealers mostly dismissed such
speculation as "position-talk" by market participants trying to
make quick profits.

The local dollar's woes were compounded by a downgrade by
Morgan Stanley of growth forecasts for the city state. The U.S.
investment bank cut its gross domestic product growth forecast
for 2002 to 3 percent, from 3.8 percent, and to 4 percent from
4.5 percent for 2003, citing an uncertain global environment.

The U.S. dollar broke past the S$1.7900 psychological
resistance to an intraday high of S$1.7930 - another new high
since June - though some traders said thin volumes helped
exaggerate the sharp moves.

The dollar later gave up some of its gains and late in Asia,
was quoted around S$1.7890, from S$1.7852 late Tuesday.

Vincent Low, head of foreign exchange and bond strategy for
Asia at Merrill Lynch, said regional currencies appear to be
trying to price in a moderation in exports growth.

"I think that's why neither the currency nor asset markets are
reacting" to strong on-year exports data in some countries.
"Everybody is trying to price in the peak," Low said.

Asian governments will likely prefer their currencies to
weaken to remain competitive, Low said, but he added that this
will have limited impact in an environment of weak external
demand.

Ahead of a public holiday Thursday, the South Korean won
tracked the weak yen to close at its lowest level in more than
three months.

The market didn't react to Minister of Finance and Economy
Jeon Yun-churl's comments on the currency.

"If the Korean won appreciates too much, that will have a
negative impact on exports." In such an event, "the Korean
government may use measures" to counteract the appreciation and
is prepared to engage in "strong surveillance" of the foreign
exchange market, Jeon told Dow Jones Newswires.

The Philippine peso closed at a near 14-month low, hurt by the
weaker yen and banks covering short dollar positions, traders
said.

The dollar ended at 52.650 pesos at the Philippine Dealing
System - its highest close since on Aug. 9, 2001 -from 52.410
pesos Tuesday, but off an intraday peak of 52.655 pesos and well
above the day's low of 52.500 pesos.

"It looks like we will be testing new levels (soon)," said a
trader at a local bank, pegging 52.75 pesos as the next
resistance.

The Thai baht came very close to last week's six-month low of
43.61 against the dollar.

But the dollar failed to breach the key 43.60 baht technical
resistance due to profit-taking near that level late in the
session, as well as selling by some exporters, traders said.

Some traders said a big market player - which was suspected to
be acting on behalf of the Thai central bank - offered to sell
substantial amounts of dollars around the 43.60 baht level. That
discouraged other players from pushing the dollar up further.

Bank of Thailand said Wednesday its ongoing repayments on debt
borrowed under an expired International Monetary Fund rescue
program aren't weakening the baht.

The dollar ended the Asian session at 43.52 baht, up from
43.425 baht Tuesday, after trading within a tight 43.50-43.59
baht band intraday.

In Indonesia, the dollar again ended flat at Rp 9,015 as the
central bank reportedly sold dollars to counter dollar demand by
local companies and also the knock-on effect of a rising dollar
against other regional currencies, traders said.

The dollar earlier Wednesday rallied to an intraday high of Rp
9,030 as foreign banks in Jakarta covered short positions,
spooked by its gains against the yen.

Local companies jumped on the bandwagon later to buy the
dollar for offshore debt repayment.

Bank Indonesia, however, was suspected of selling the dollar
through state banks to support the rupiah.