Asian currencies mixed amid pressure on dollar

Asian currencies mixed amid pressure on dollar

SINGAPORE (Dow Jones): Asian currencies were mixed late
Wednesday, as renewed pressure on the dollar helped them sustain
their recent gains despite the region's grim economic outlook,
dealers said.

The Federal Reserve's decision Tuesday to trim short-term
interest rates by a quarter percentage point was widely expected,
and had little impact on Asian currencies.

Instead, the market focused on the Fed's statement
accompanying its action, which suggested that the U.S. economy
hasn't responded to the central bank's attempts to spur growth.
The Fed's latest move marked the seventh cut this year, bringing
interest rates to their lowest level in seven years.

The Fed also indicated it was more likely to lower than raise
rates in the future, saying risks were "weighted mainly
toward . . . economic weakness" rather than inflation.

"The repeat of the June statement emphasized the fact that
business capital spending continues to weaken, suggesting that no
upturn is in sight for the high-tech industry that fuels the
region's exports," Bank of America said in a report.

Repeated verbal warnings by Japanese officials against
excessive yen strength did little to offset the pressure on the
dollar, which slid overnight following the Fed's announcement.

At 0820 GMT (5:20 p.m. Jakarta time), the dollar was quoted at
119.69 yen, slightly higher than 119.55 yen late Tuesday in New
York. The dollar was at 120.68 yen late Tuesday in Tokyo.

Meanwhile, the Indonesian rupiah closed slightly lower as
local companies picked up dollars for debt repayment, traders
said.

After falling to an intraday low of Rp 8,500, the dollar
closed at Rp 8,600, up from its close Tuesday at Rp 8,548.

The dollar fell earlier in the morning as banks bought rupiah
amid concerns over the central bank's policy to tighten liquidity
in the interbank money market system.

Despite the yen's resilience, fears of central bank
intervention prevented the South Korea won from breaching past
1,280 won to the dollar, dealers said.

In the case of the Singapore dollar, talk of intervention by
the local monetary authority overnight kept the U.S. currency
supported above S$1.7500, dealers said.

In Seoul, the dollar finished at 1,282.70 won, down from
1,283.80 won Tuesday.

The U.S. dollar's weakness against the yen and the euro failed
to inspire the Singapore dollar, dealers said.

The U.S. dollar briefly received an additional boost late in
the day, jumping to around S$1.7540, on the Australian
government's approval of Singapore Telecommunication Ltd's A$14
billion-plus takeover bid for Australia's second-largest
telecommunications group, Cable & Wireless Optus Ltd.

But the U.S. currency failed to sustain its gains, and
subsequently retreated to S$1.7525, weaker than late Tuesday's
level.

The Thai baht was the main beneficiary of the dollar's
weakness against the euro and the yen, dealers said.

The Thai currency strengthened to 44.52 baht per dollar,
compared with 44.745 baht late Tuesday.

In Taiwan, the U.S. dollar ended at NT$34.603, higher than
NT$34.586 Tuesday. The U.S. dollar had touched an intraday low of
NT$34.496.

Concerns over Taiwan's sluggish economic fundamentals will
likely continue to weigh on the local dollar, observers said.