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.