Asian currencies fail to build on early strength

Asian currencies fail to build on early strength

HONG KONG (Dow Jones): After strengthening moderately in early
dealing, Asian currencies tracked sideways for the remainder of
local hours Monday.

Dealers described trading activity as unusually quiet. With
Indonesian markets on hold awaiting the appointment of a new
cabinet, possibly as early as Tuesday, and domestic markets in
Thailand closed for a public holiday, interest in Southeast Asian
foreign exchange markets was minimal. The South Korean won
strengthened marginally against the U.S. dollar, and the New
Taiwan dollar also ended the day a touch higher.

The rupiah began Monday's Asian session strongly, rising
swiftly from levels seen at Friday's close as market players bid
up the currency in response to a market-friendly weekend speech
by Indonesia's newly elected president, Abdurrahman Wahid.

In his first major policy address to an international audience
since his election last Wednesday, Wahid pledged that the top
priorities of his administration would be to resuscitate
Indonesia's economy and to attract foreign capital back to the
country.

But the market balked at following up its initial flurry of
rupiah-buying.

After falling to encounter firm support at Rp 6,800, the
dollar traded sideways for the remainder of the session.

"People are just waiting for the cabinet line-up to be
announced, and without the rupiah to set direction, the rest of
the regional currencies have nothing to trade off," said a trader
at a U.S. bank in Singapore.

Speculation over the Indonesian cabinet's likely composition
has been intense following Wahid's comments during the weekend
that it would include ministers who served in previous
governments.

With the regimes of former Presidents Soeharto and B.J.
Habibie both tainted by corruption scandals, the market will
regard any concentration of power in the hands of former
ministers as negative for the rupiah.

Late in Asia Monday, the U.S. dollar was quoted against he
Indonesian currency at Rp 6,830, down from Rp 6,920 Friday.

The Thai baht ended Monday's session higher. With dollar-
hungry Thai corporations absent from the market because of the
holiday in Thailand, dollar sales from U.S. banks offshore
succeeded in pushing the U.S. currency down through support at
39.10 baht to hit a fresh six-week low.

Late in Asian trade, the dollar was quoted at 39.9250 baht,
down from 39.1850 baht toward the end of Asian dealing Friday.

When the onshore market reopens Tuesday, many dealers expect
dollar demand to re-emerge, once more pushing the U.S. currency
over the 39 baht mark.

Against the Singapore dollar, the U.S. currency ended Asian
hours Monday at S$1.6644, down from S$1.6687 Friday.

The Philippine peso also closed higher, but the rise was
modest, with the U.S. currency remaining well supported at the
psychologically important 40 pesos level.

At the local close in Manila, the U.S. dollar was quoted at
40.100 pesos,

The South Korean won ended slightly higher against the U.S.
dollar as local currency purchases by foreign investors
outweighed sales by state-controlled banks.

At the Seoul close, the U.S. dollar was quoted at 1,204.90
won, down from 1,205.40 won Friday.

The New Taiwan dollar edged a fraction higher, with the U.S.
currency easing to NT$31.757, from NT$31.761.