Asian currencies mixed, BoJ intervenes again

Asian currencies mixed, BoJ intervenes again

Alan Yonan Jr., Dow Jones, Singapore

Asian currencies were mixed in narrow trading ranges Thursday
as market participants remained cautious of further U.S. dollar
buying by Japanese authorities to curb the yen's strength.

The Bank of Japan and Ministry of Finance intervened in the
currency markets for the second straight day, following through
on the MOF's threat to "take action when necessary" to keep the
currency pair in line.

Japanese authorities pulled the trigger when the U.S. dollar
fell through the 124 yen level after the Asian session had closed
and movements were largely being driven by trading in London. The
U.S. dollar shot up to 124.90 yen within minutes after the
intervention.

The U.S. dollar had traded in a tight 124-124.15 yen range
during Asian hours as fears of possible MOF intervention hung
over the market. Most other regional currencies were similarly
rangebound.

"The market will continue to be wary of the BOJ, with
expectations that it may have to act again in the current dollar-
heavy environment," said Emmanuel Ng, currency strategist at Bank
of Tokyo-Mitsubishi.

After a long period of strength, the U.S. dollar has
languished over the past few months as flat corporate profits in
the U.S. have sent investors looking for better opportunities in
Asia and elsewhere.

The South Korean won, New Taiwan dollar and Indonesian rupiah
strengthened. The Singapore dollar and Philippine peso finished
marginally weaker, while the Thai baht was unchanged.

The won hit another 15-month high on investor optimism over
South Korea's economic recovery. The country is pegged to be
Asia's top performer this year as structural reforms have boosted
economic efficiency and turned a current account deficit into a
surplus.

The U.S. dollar ended at 1,246.1 won, down from Wednesday's
finish at 1,247.2 won. The U.S. dollar traded between 1,245.8 won
and 1,250.0 won.

Although foreigners were net sellers of Korean stocks in the
first quarter, strong earnings results by Korean companies should
lure those investors back, Barclays Capital said in a research
report.

Continued inflows of foreign direct investment and Korea's
relatively attractive interest rates are also supporting the
Korean won, Barclays said.

"In the long run, because a significant share of foreign
exchange inflows to Korea are structural, it will be difficult to
resist an appreciation of the won," the report said.

The New Taiwan dollar finished at a new 11-month high for the
second day in a row, drawing support from the stable yen.

The U.S. dollar ended at NT$34.383, down from Wednesday's
NT$34.393.

U.S. dollar selling by exporters and local banks underpinned
the Taiwan currency. But that strength was partially offset by
offshore players and foreign banks covering their short U.S.
dollar non-deliverable forwards positions.

The opposing forces kept the currency pair in a narrow
NT$34.37-NT$34.39 range.

The Philippine peso weakened as banks on continued the U.S.
dollar short covering triggered by BOJ intervention a day
earlier.

The U.S. dollar closed at 49.840 pesos on the Philippine
Dealing System, up from 49.790 pesos Wednesday.

Interbank players in Singapore sold the local currency on
fears that the Monetary Authority of Singapore may have stepped
into support the U.S. dollar.

Late in Asia the U.S. dollar was quoted at S$1.7965, up from
S$1.7940 late Wednesday.

"Everybody was buying, it (U.S. dollar) kept blipping higher
and higher, and people were just covering their short positions,"
an Asian bank dealer in Singapore said.

The buying surge pushed the U.S. dollar to an intraday high of
S$1.8003.

While there was some speculation the MAS was behind the move,
other players said they doubted it was the work of the de facto
central bank.

The rupiah ended at an eight-month high despite signs that the
government's privatization program may be running into some
trouble.

Near the end of Asian trading the U.S. dollar was quoted at Rp
8,960, down from Rp 9,055 late Wednesday. It was the first time
the U.S. dollar closed below Rp 9,000 since early September.

The rupiah has risen steadily over the past two months,
sparked by success in selling banking assets to raise cash for
the state budget.

However, the government said its planned sale of Bank Niaga
could be postponed if it can't get the price it is seeking for
its 51% stake in the bank. Final bids are due Monday from four
short-listed investors.

Also, the government's planned sale of a 45 percent stake in
PT Indonesia Satellite this year is facing problems after a
rights issue last week failed to raise as much as expected.

Against the baht, the U.S. dollar finished at 42.810 baht,
unchanged from a day earlier.

U.S. dollar selling by profit-takers was countered by a wave
of short-covering in the U.S. currency, traders said.