Asian currencies mixed; expected lower next week

Asian currencies mixed; expected lower next week

SINGAPORE (Dow Jones): Asian currencies were mixed late
Friday, with the Thai baht and the Philippine peso resuming their
recent downtrend, heralding more weakness for these Southeast
Asian units.

The dollar had rebounded above the 41 baht psychological
resistance level, to trade at 41.225 baht in late trading, up
from 40.925 baht late Thursday.

Against the peso, the dollar had risen to 44.980 peso earlier
Friday, but retreated to 44.860 peso late in the day, little
changed from Thursday's close of 44.865 peso.

The Singapore dollar continued its upward move after
Thursday's strong gains, which were spurred by the Monetary
Authority of Singapore's comments suggesting the local currency
may be allowed to appreciate.

The Indonesian rupiah was marginally firmer, although it
remained stuck within its recent trading range. Despite
heightened political uncertainty ahead of the country's National
Assembly next month, investors are hesitant to push the currency
lower, with the central bank having stepped up its vigilance to
deter speculation against the rupiah.

A 4.8 percent plunge in the South Korean stock market stung
the won, while month-end U.S. dollar-demand from local importers
helped support the New Taiwan dollar, dealers said.

Political uncertainties in several Southeast Asian countries,
the dollar's strength against the Japanese yen and strong local
corporate demand for the U.S. currency will continue to pressure
Asian currencies next week, analysts said.

"Asian currencies will still maintain their weak tone," said
Thio Chin Loo, a foreign exchange strategist at BNP Paribas.

Meanwhile, market participants are awaiting the release of
U.S. second-quarter gross domestic product data due later Friday.

"Tonight's GDP will probably put to rest fears of a hard
landing," said Thio.

The Thai baht's rebound Thursday proved to be short-lived when
the beleaguered currency - the latest target for Southeast Asian
bears - fell back below the 41 baht support level Friday, on
dollar-demand from local corporates and offshore dollar-buying,
dealers said. The Thai baht, which had been under heavy pressure
since the start of the week, was pushed to a 10-month low
Wednesday.

Amid political uncertainty ahead of Thailand's general
elections later this year, many analysts expect the baht to
weaken beyond 42 baht to the dollar in the next few months.

In fact, a slide toward 41.50 baht could come as early as next
week, a dealer at an Asian bank said.

The Thai authorities' apparent tolerance for a weak baht had
provided the catalyst for offshore investors to push down the
baht, dealers said.

A Bank of Thailand official Friday denied a report that the
central bank intervened in the foreign exchange market in London
trading hours this week to defend the baht against speculative
trade.

The baht's weakness is expected to continue dragging down the
Philippine peso, which is already undermined by domestic
political uncertainties and concerns over the government's
yawning fiscal deficit.

In other Southeast Asian currency markets, the movements of
the rupiah and the Singapore dollar were tame.

The dollar was at 8,935 rupiah, down slightly from Rp 8,963
late Thursday. Keen dollar demand around Rp 8,900 will likely
keep the U.S. currency buoyed, while Indonesian state banks and
offshore participants are expected to sell dollars around Rp
9,150, a dealer at a U.K. bank said.

Against its Singapore counterpart, the U.S. currency was at
S$1.7322, down from S$1.7350. Participants are still smarting
from the de facto central bank's unexpected announcement Thursday
it was prepared to allow a modest appreciation of the Singapore
dollar in relation to the currencies of its major trading
partners.

Elsewhere, foreign fund equity outflows on the local stock
market and dollar-buying in the non-deliverable forward market
dented the South Korean won, dealers said.

The dollar finished at 1,116.60 won, up from Thursday's close
of 1,113.40 won.

The won, which has been outperforming its other ailing Asian
counterparts in recent months, could weaken further next week
with the yen's weakness and as the stock market is pressured by
concerns over the health of the country's conglomerates, said
Thio at BNP Paribas.

If the dollar breaks 1,120 won, it is set to strengthen to
1,130 won thereafter, she added.

Against the New Taiwan dollar, the U.S. currency was at
NT$31.050, barely changed from Thursday's close of NT$31.052.