Asian currencies gain as yen shows signs of life

Asian currencies gain as yen shows signs of life

SINGAPORE (Dow Jones): Southeast Asian currencies were
generally stronger against the U.S. dollar in thin trading late
on Monday, after the yen regained its footing early in the
session, traders said.

Profit-taking early in Monday's session pushed the U.S. dollar
down a touch, but most traders and economists are expecting yen
weakness to re-emerge during the week.

"The U.S. dollar has made significant gains versus other major
currencies and there is scope for this to continue in the coming
days," said a treasury economist at Standard Chartered Bank in
Singapore.

In late trading, the U.S. dollar was trading at 119.03 yen,
down a touch from 120.50 on Friday.

Sluggish regional markets took their cue from the U.S. dollar-
yen rate, which moved within a tight 118.89-119.38 range during
the day, traders said.

The U.S. dollar was also trading lower at S$1.7236 in late
trading, down from S$1.7270 late Friday.

"There was some good (U.S.) dollar selling early in the
morning, primarily because of the stronger yen. Volumes were thin
for most of the day," said a trader at a Japanese bank in
Singapore.

The U.S. dollar was also trading at 37.2750 Thai baht, down
from 37.40 bath late Friday.

The U.S. dollar was also trading at 8,845 Indonesian rupiah,
almost unchanged from Rp 8,855 Friday. Traders said the lack of
change in the dollar/rupiah level was puzzling, given the
government's indecision about closing illiquid domestic banks.

The government postponed for two weeks a decision to close up
to 40 banks, which is part of its plan to revitalize the
financial sector.

"Indonesia's decision to delay the announcement on bank
closures does nothing to boost its image," said the economist at
Standard Chartered Bank. "At best, it indicates time allocated to
establishing which banks are viable (and thus reflects on the
complex mess in which the banks are entangled), or simply the
government is balking at the prospect of slashing the banking
sector down to size."

He added that the state of the country's affairs has
deteriorated to the extent that only aggressive culling of the
weak banks will restore confidence in the financial system.

On the Philippine Dealing System, the U.S. dollar was trading
at 38.975 pesos, down from 39.120 pesos late Friday. Traders said
a lack of fresh news hamstrung the market, especially with the
tight range-bound moves in the dollar-yen.

Economists said the success of this month's euro-denominated
bond issue will be important in determining investors' sentiment
toward the Philippines.

In North Asia, the U.S. dollar was trading at 1,223 Korean
won, unchanged from Friday's levels, as South Korean markets were
closed for a public holiday Monday. In Taiwan, the U.S. currency
was also trading at NT$32.992, down a touch from NT$33.055 late
Friday.