Asian currencies end mixed

Asian currencies end mixed

HONG KONG (Dow Jones): A day of directionless trading left Asian currencies mixed at the end of local trading hours Wednesday.

Long anticipated, Tuesday's 25-basis-point increase in U.S. interest rates had little impact on regional markets.

While the Thai baht and the Indonesian rupiah both rose, the Singapore dollar and the Philippine peso fell back against the U.S. currency.

In Northeast Asia, both the South Korean won and the New Taiwan dollar edged higher.

Despite the baht's rise, dealers said the Thai currency is set to remain firmly range-bound.

Large dollar bids placed by a major Thai corporation have supported the U.S. currency above 38.20 baht for the last week, they noted, while offers from U.S. banks are capping the market at 38.40 baht.

A pledge from the Bank of Thailand's assistant governor for monetary policy to reduce domestic interest rates further despite the U.S. rate hike had little impact on trading.

Late Wednesday in Asia the dollar was quoted against the baht at 38.3450 baht, down from 38.3900 baht the previous day.

The U.S. dollar also ended lower against the rupiah, but dealers hesitated to read much significance into the Indonesian currency's rise.

Although the scandal surrounding the irregular transfer of $80 million from Bank Bali to a company with close links to Indonesia's ruling Golkar party has severely damaged investor confidence in the country and the currency, few market players are actively selling the rupiah short.

Instead the majority have retreated to the sidelines and are content to remain neutral on the currency for the time being, said traders.

Late Wednesday the U.S dollar was being quoted at Rp 7,590, down from Rp 7,752 toward the end of Tuesday's trading.

In contrast the Singapore dollar weakened Wednesday, falling to its lowest level in a month on U.S. dollar purchases by interbank traders responding to a rally in the U.S. currency against the yen.

While the market remains upbeat on Singapore's economic outlook, some traders suggested that the Singapore dollar, with short-term interest rates of just over 2 percent, remains an attractive funding currency for carry trades.

Late in Asian trading, the U.S. dollar was quoted at S$1.6925, up from S$1.6892 the day before.

The Philippine peso also closed lower Wednesday, after hitting a six-month low in intraday trading as dealers continued to respond to the peso's shrinking yield spread over the dollar by bidding up the U.S. currency.

The peso's fall, which saw the dollar rise to within a whisker of the psychologically significant 40.00 mark, prompted central bank Governor Raphael Buenaventura to pledge to keep overnight interest rates steady this week, rather than cutting them.

Although Buenaventura ruled out a rate increase, he suggested that the central bank may raise banks' reserve requirements in order to mop up liquidity and support the peso.

At the local close the U.S. currency was quoted at 39.780 pesos, up from 39.750 pesos at the end of Tuesday's session.

In North Asia, the Korean won closed higher, lifted primarily by trade flows as Korean exporters repatriated revenues ahead of the approaching month's end.

As local trading finished, the U.S. currency was quoted at 1,193.40 won, down from 1,199.00 won at Tuesday's close.

Capital inflows continued to support the new Taiwan dollar, forcing the U.S. currency down to close at NT$31.867, from NT$31.882 the day before.