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.