Asian currencies fall on Yamaichi collapse

Asian currencies fall on Yamaichi collapse

SINGAPORE (AFP): Asian currencies weakened yesterday as
investors worried over a new round of volatility following the
deteriorating market situation in South Korea and the collapse of
Japanese brokerage Yamaichi.

Tokyo's action to avert a further escalation of the crisis
after the fall of Japan's fourth largest securities firm and the
revelation of IMF measures to be imposed on South Korea would
determine the course of Asian units in the next few days,
analysts said.

"If the measures of the IMF are seen as insufficient" to save
South Korea, "then we could see chaos in the weeks ahead," said
Joanne Chong, an analyst at British investment house IDEA.

Alison Seng, a regional economist at Standard and Poor's MMS,
noted that "the trend of financial turmoil in Japan is extending"
and the "fast action" of government would do much to prevent a
contagion from battering the currencies.

At the close of foreign exchange trading here Monday, the
South Korean won slid to 1,110 to the US dollar after opening
around 1,055. The Taiwan dollar dropped to 32.416 after closing
last week at 32.20 to the greenback.

Southeast Asian currencies fell from their closing rates of
Friday, with the Singapore dollar at 1.5927 from 1.5895 to the US
dollar, the Malaysian ringgit at 3.4700 from 3.4600, and the Thai
baht at 39.13 from 39.00.

The holiday in Japan limited volatility in dollar-yen trading,
with the yen quoted in a tight range of 126.45 to 127.00 against
the dollar, before closing at 126.99, analysts said.

"Japan and Korea are the biggest economies in Asia and people
are very apprehensive on what's going to happen when the markets
open tomorrow in Tokyo," said Tan Kee Wee, vice-president of
United Overseas Bank (UOB) Investment Research.

"I feel the (Southeast Asian) currencies are oversold ... but
right now it's just wait and see," Tan added.
However, dealers expected then yen to fall through the 127-yen to
the dollar level when trading resumes Tuesday.

Chong said they saw the yen "touching 127.27 levels," as the
currency was seen to mirror an expected plunge in the stock
market Tuesday after Nikkei futures were traded last week below
500 points.

There was also sentiment that the yen should fall to 130,
analysts said.

Tokyo had been swift Monday in issuing statements outlining
its moves to help the finance industry in the wake of the
Yamaichi collapse.

But it remained to be seen how the Bank of Japan would handle
any other cases of "hidden debt" that could emerge later on, and
how it could manage the merger of weak banks to stronger banks,
which took time, Chong said.

"Once the skeletons are all out of the closet, we hope the
Bank of Japan would have a current plan," she added.