Asian currencies finish mostly stronger against U.S. dollar

Asian currencies finish mostly stronger against U.S. dollar

HONG KONG (Dow Jones): Most Asian currencies finished local trading hours Tuesday a touch stronger against the U.S. dollar, but activity was relatively subdued and regional markets generally trendless.

Enthusiastic buying of the won by foreign equity investors lifted the Korean currency steeply in early trading. Within an hour of the open, heavy dollar sales had pushed the U.S. currency to an intraday low of 1,115.10 won, only just above its 13-month low of 1,114.00 won hit last month.

The speed of the won's run-up proved uncomfortably fast for the Korean monetary authorities, prompting an official at the Ministry of Finance and Economy to declare that the government will not tolerate further strengthening in the won.

Meanwhile the Bank of Korea warned that the won's appreciation could damage the country's economy and said the central bank is prepared to act to stabilize the currency market.

The verbal interventions, coupled with government-backed dollar buying by the state-run Korea Development Bank, pushed the won back down from its high, but the currency still ended up on the day.

At the close the dollar was quoted at 1,118.50 won, down from 1,119.20 won Monday.

Although Korean officials have said the government is ready to issue further tranches of won-denominated bonds to fund future foreign exchange market interventions, most market participants remain confident that the won will continue to strengthen over time.

Rather than attempting to reverse the local currency's upward trend, the authorities are merely trying to limit its appreciation to a manageable pace, they believe.

Elsewhere in the region the New Taiwan dollar ended little changed, as the central bank bought U.S. dollars to counter the upward pressure on the local currency from continued foreign fund inflows.

Despite a heightening of tensions with mainland China in the run-up to Taiwan's March 18 presidential election, offshore market players argue that the island's favorable economic fundamentals will support the currency over the long term. In the short term the authorities in Taipei will act to smooth any excessive market volatility, they add.

At the end of local trading, the U.S. dollar was quoted against the Taiwanese currency at NT$30.762, little changed from NT$30.764 the previous day.

In Southeast Asia the Philippine peso ended sharply lower as the local equity market index dropped 3 percent. The fall reflected the damage inflicted on investor confidence by an ongoing price manipulation scandal on the Manila stock exchange, which Tuesday triggered the mass resignation of the bourse's compliance staff.

By the close of currency dealing, the dollar had risen to 40.980 pesos, up from 40.900 pesos Monday. Dealers widely expect the U.S. currency to breach the 41.00 pesos mark Wednesday.

The Singapore dollar recovered slightly from recent lows, after the U.S. currency failed to sustain its advance above S$1.7250. Some dealers suspected the local monetary authority had sold U.S. dollars to bring the local currency back into line with its target index.

Toward the end of trading in Asia, the U.S. dollar was quoted at S$1.7213, down from S$1.7252 the day before.

The Thai baht also gained ground, with the U.S. dollar easing back to 38.0250 baht late in Asia, from 38.1250 baht the previous day.

The rupiah ended Asian dealing a fraction weaker after reports that Indonesian president Abdurrahman Wahid had canceled meetings for a cardiac checkup raised fresh fears about the head of state's fragile health. A presidential spokesman denied the medical was unscheduled.

Towards the end of Asian dealing the dollar was trading at Rp 7,455 rupiah, compared with Rp 7,447 the day before.