Asian currencies end mixed, baht recovers from 11-month low

Asian currencies end mixed, baht recovers from 11-month low

HONG KONG (Dow Jones): Asian currencies enjoyed mixed fortunes
on Friday.

The expected purchase of two Thai banks by foreign investors
helped lift the baht, particularly in the cross market against
the Singapore dollar.

At the same time, the Singapore currency lost ground against
the U.S. dollar, in part because of the yen's consolidation.

The Philippine peso strengthened in anticipation of higher
domestic interest rates, but the Indonesian rupiah dropped as
flaring violence in East Timor unnerved the market.

In North Asia, the won rose in the last minutes of trading to
close flat on the day, while the New Taiwan dollar continued to
edge higher.

The Thai baht's recovery from the 11-month low it saw Thursday
was attributed partly to the expected acquisition of Nakornthon
Bank by Standard Chartered Bank and the proposed purchase of a
stake in Radanasin Bank by Singapore's United Overseas Bank.

Dealers said Standard Chartered emerged as the market's main
buyer of baht at the start of Asian trading Friday, forcing the
U.S. dollar down from an early high of 38.8300 baht.

News of UOB's proposed purchase also spurred buying of the
baht against the Singapore dollar, reinforcing the baht's rise,
while pushing the Singapore currency down.

Position-covering by market players who went short the baht
earlier in the weak helped propel the baht higher still, with the
U.S. dollar falling to reach a mid-afternoon low of 38.6600 baht.

Towards the end of Asian trading, however, the U.S. dollar had
recovered slightly, to trade at 38.7100 baht, compared with
38.8900 baht late the day before.

Commercial bids should lend support to the dollar over the
coming week, while the U.S. currency will struggle to climb above
the 39.0000 baht level, said traders, who predicted a short-term
range of 38.60 baht to 38.90 baht.

The Singapore dollar is although thought likely to remain
range-bound over the coming week, despite its fall Friday.

By late in Asian trading, the U.S. dollar had been pushed up
to S$1.6878, from S$1.6832 the previous day.

According to one dealer at a local bank in Singapore, the U.S.
dollar is unlikely to stray outside a S$1.6840 to S$1.6890 range
in the short term, while remaining between S$1.6800 and S$1.6950
over a longer-time horizon.

The Philippine peso strengthened Friday, after the central
bank emerged the victor in its policy struggle with the
Philippine Treasury.

In recent weeks, the treasury has been in favor of massaging
domestic interest rates lower, even at the expense of the peso,
while the central bank has maintained that currency stability
must take priority.

The debate appeared to have been settled Friday, when Finance
Secretary Edgardo Espiritu said he expected treasury bill yields
to rise at Monday's auction.

According to Prasenjit Basu, regional economist at Credit
Suisse First Boston in Singapore, short-term interest rates are
likely to climb by between 25 and 45 basis points to between 8.9
percent and 9.0 percent, reestablishing the stability of the
peso, after its recent fall to 10-month lows.

At the close of local trading Friday, the U.S. currency was
quoted against the peso at 39.740 pesos, down from 39.780 pesos
the day before.

Relatively favorable August inflation and July trade figures
failed to lend any support to the rupiah Friday, as dollar demand
pushed the U.S. currency higher in a market depleted of players.

Many offshore banks, unnerved by the political uncertainties
in Jakarta and the worsening violence in East Timor, said they
would remain on the market's sidelines for the foreseeable
future.

Late in Asian trading hours the U.S. dollar was quoted at Rp
7,820, up from Rp 7,707 the previous day

In North Asia a flurry of late U.S. dollar sales lifted the
won off its earlier intraday low to close flat on the day.

Steven Xu, a treasury economist at the Standard Chartered Bank
in Hong Kong, said that although developments in South Korea's
corporate sector will continue to drive volatile swings in the
dollar/won exchange rate over the coming week, the U.S. currency
should remain within a broad 1,180 won to 1,200 won band.

At Friday's close, the U.S. dollar was at 1,190.50 won, the
same level as at the end of Thursday's session.

The New Taiwan dollar ended little changed, closing at
NT$31.823, down from NT$31.825 the day before in relatively light
trading.