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.