Asian currencies lower on U.S. rate fears

Asian currencies lower on U.S. rate fears

HONG KONG (Dow Jones): Ruffled by hawkish commentary from the U.S. Federal Reserve chief, and edgy as investors dump yen, Asian currencies are weaker Friday.

Indonesian government officials offered up some soothing words to shore up confidence in the rupiah, and dealers say most other currencies have stabilized around current levels. But many add it'll be a few days before the bad mood lifts.

"So long as (the U.S. dollar) holds under Y111.00 the Asian regionals should stabilize," said Rebecca Patterson, global currency strategist with J.P. Morgan in Singapore.

The dollar is trading around 110.78 yen, from Y110.64 in New York late Thursday. Sellers were more active last session after the news that Moody's Investors Services Inc. is mulling another downgrade for Japan. Some traders say the U.S. unit is headed for Y112.00.

And that's helped unsettle regional currencies already left shaky by a mess of domestic concerns and rate worries.

Federal Reserve Chairman Alan Greenspan figured most prominently in the day's losses, said traders. Analysts inferred from his semi-annual Humphrey Hawkins address that another 75 basis points in rate tightening is due this year. Many market traders had looked for just 50 basis points more.

The U.S. dollar is up to 38.03 against the Thai baht, from 37.72 baht late Thursday. A dealer with a U.S. bank said the unit broke through a previous high at 37.85 baht, "but it remains unclear whether this is a false break, or not."

Against the Indonesian rupiah, meanwhile, the U.S. dollar is trading at Rp 7,439, up from Rp 7,415 late in the previous session. The currency is undermined by lingering political concerns around the dismissal of General Wiranto from cabinet, and losses in the stock market.

Indonesian senior economics minister Kwik Kian Gie said Friday that he remains confident the rupiah can strengthen to between Rp 6,000 to Rp 7,000 to the dollar.

And many analysts say Rp 7,500 is a good level to start selling U.S. dollars.

Morgan's Patterson also faults a deterioration in regional risk appetite for the woes in the currency markets this week. Rising foreign exchange volatility - in part as year-2000 liquidity is taken back - growing fears about the Fed, widening swap spreads and wider emerging market bond spreads are just some of the factors cutting into confidence, she said.

The U.S. dollar is also higher against the Korean won, trading at 1129.10, from 1,128.70 late Thursday, but off the sessions highs.

Against the Singapore currency, the U.S. dollar is quoted at S$1.7047, compared with S$1.7063 earlier, and unchanged from late Thursday.

It is trading at 40.66 against the peso, up from PHP40.573 late in the previous session.

Taiwan's dollar is now little changed against the U.S. unit, with the U.S. dollar trading at NT$30.715, from NT$30.711.