Asian currencies end mixed as regional markets flounder

Asian currencies end mixed as regional markets flounder

HONG KONG (Dow Jones): Asian currencies were mixed in local
trading hours Thursday, as easing tension in Latin America and
choppy trading in the U.S. dollar against the yen left dealers
unsure which direction regional markets are set to take.

While the Singapore dollar and the Philippine peso closed a
little lower against the U.S. currency, the Thai baht edged
higher, and the Indonesian rupiah ended the day flat.

In North Asia, the South Korean won nudged upward against the
U.S. dollar, grinding higher despite sales of the local currency
from state-owned banks. The New Taiwan dollar also edged higher.

However, the price action was generally subdued and traders
were reluctant to take positions.

"At this stage no one has a clear idea where these currencies
are going," said the head of regional foreign exchange at one
U.S. bank in Singapore.

"No one is trading on the fundamentals, he added. " Everyone
is just focusing on what the customers are doing and following.
There are a lot of portfolio shifts going on."

Spooked by recent tensions in Latin American emerging markets
and this week's rise in the Japanese yen, market players, who
last week went long in Asian currencies against the yen, on
Thursday sold regional currencies including the Singapore dollar
and the won in order to exit their positions.

Demand to buy Singapore dollars to cover outstanding positions
pushed the U.S. currency to an intraday low of S$1.7275.

"The U.S. dollar is looking pretty bid right now. I think we
should see it going higher," said the regional currency trader at
one Japanese bank in Singapore, predicting that the U.S. currency
would test S$1.7350 in the near future.

Late in Asian trading Thursday, the U.S. dollar was quoted at
S$1.7317, up from S$1.7300 late the previous day.

The U.S. dollar also found support against the Philippine
peso, recovering from a low of 37.095 pesos to end the domestic
session at 38.065 pesos, up from 38.050 at Wednesday's close.

In contrast, the U.S. currency lost ground against the Thai
baht after seeing heavy offers between 37.15 baht and 37.20.

According to traders in Singapore, however, sizable bids for
the U.S. dollar are likely to emerge at the 37.00 baht level,
trapping the U.S. currency in a 37.00 to 37.20 range in the short
term.

Late in Asian trading, the U.S. dollar was quoted at 37.1100
baht, down from 37.1950 late on Wednesday.

Also seen range-bound is the Indonesian rupiah, which traded
sideways against the dollar Thursday.

Many market participants believe that Bank Indonesia is
determined to support the local currency in the approach to
Indonesia's June 7 parliamentary election, capping the dollar at
levels around Rp 8,200. At the same time, however, they are
reluctant to go long on the rupiah while the risk remains that
violence may flare ahead of the poll.

"It will be hard for the dollar to fall below Rp 7,950," said
one regional currency trader, predicting that the Indonesian
currency will continue to trade sideways for the time being.

Late Thursday, the dollar was quoted at Rp 8,105, little
changed from Rp 8,040 the previous day.

In North Asia, trade flows lifted the won against the dollar,
despite continued state-sponsored purchases of the dollar
mandated by a government anxious to maintain Korea's export
competitiveness.

At the close of local dealing, the U.S. currency was quoted at
1,188.30 won, down from 1,191.00.

The New Taiwan dollar also ended the day a touch higher,
although the central bank sold U.S. dollars to smooth volatility
stirred up by the choppy trading in the yen.

At the close, the U.S. dollar was at NT$32.772, down slightly
from NT$32.777 the day before.