Asian currencies ease along with yen

Asian currencies ease along with yen

SINGAPORE (Reuters): Asian regional currencies eased along with the yen yesterday with the dollar moving back above 140 as speculative bids triggered stop-loss buys above that level.

But traders said dollar/yen and the regional currencies will trade quietly ahead of the weekend and Japan's Upper House elections on Sunday.

Prime Minister Ryutaro Hashimoto vowed on Wednesday to seek tax cuts in a permanent overhaul of Japan's tax system, but disappointed financial markets by offering no details. The dollar rallied a yen.

The won bucked the trend with a two percent rise to new year highs amid corporate dollar selling.

The absence of central bank intervention - verbal or otherwise -- also helped the firmer trend as did the fact that the market is still long dollars.

The Korea government said it will increase its overall budget deficit to 17.5 trillion won this year from an earlier forecast of 7.8 trillion in order to boost the economy.

The previous deficit target was part of an agreement with the International Monetary Fund, which arranged a $58.35 billion bailout package for the country in December.

But officials said the IMF agreed on expanding the budget deficit when President Kim Dae-jung visited the United States in June.

A group of IMF officials are currently talking with South Korea in Seoul about economic management for the third quarter.

South Korea's Finance and Economy Ministry said foreign direct investment plans received for the first half of this year totaled $2.46 billion, sharply down from $4.46 billion a year ago.

In June alone, the government received foreign direct investment plans totaling $662 million, up 0.5 percent from $654 million in May, a ministry statement said.

The rupiah sank past 15,000 per dollar but recovered some poise towards the close.

Coordinating Minister of Economy, Finance and Industry Ginandjar Kartasasmita said he expects the rupiah to recover to 10,000 or better before the year. He also said he expected the stock market to recover.

The rupiah was last at 10,000 in May this year and dealers said it would seem a tall order for it to rally some 30 percent from current levels in less than six months given the acute political and economic uncertainty.

Standard and Poor's affirmed its long term foreign currency rating at CCC+ and said the outlook was negative.

An Indonesian delegation will brief European bank creditors on progress of Indonesia's debt rescheduling program in Frankfurt on Friday.

Indonesia and its creditor banks last month agreed to restructure its $80 billion private sector debt under a plan agreed in final talks in Frankfurt.

The Thai baht was a touch easier although the domestic markets were closed today for a holiday.

Thai central bank governor Chatu Mongol said on Wednesday that higher domestic money market liquidity this week was due to increased government spending.

Chatu Mongol told reporters that the higher liquidity, which pushed the central bank's benchmark one-day repurchase (repo) rate to 15.75 percent on Wednesday from 19.00 last month, was also felt by the market because of low commercial demand for funds.

He later said that Thailand would consider raising rates whenever it saw abnormal speculative pressure on the baht.

Dealers noted a triangle formation on the dollar/baht chart which usually heralds a significant break to the upside or downside.

The ringgit was weaker in line with the general trend with operators still taking a close look at the economy.

Malaysia's Deputy Prime Minister Anwar Ibrahim and Minister of Special Functions Daim Zainuddin will lead separate teams on road shows to important financial centers around the world in a bid to raise funds.

Deputy Finance Minister Affifuddin Omar said Malaysia is studying bankruptcy laws in the United States with a view to introducing them in the country.

He told reporters that the government was studying the U.S. Chapter 11 law on bankruptcies.

The Singapore dollar shed nearly one percent and the Philippine peso over a half a percent while the Taiwan dollar was only marginally easier.