Asian currencies mixed in thin trading

Asian currencies mixed in thin trading

SINGAPORE (Dow Jones): Asian currencies are mixed against the U.S. dollar late Friday in trade thinned by holidays in Japan, South Korea and Thailand.

The dollar took a break from its recent rise against the yen, giving support to some regional currencies. Late in the local trading session it fell toward Y107 after peaking earlier this week at a two month-high of Y109.61.

A decision overnight by the Bank of England's monetary policy committee to leave interest rates at 6 percent triggered heavy sales of sterling, particularly against yen, which helped keep the Japanese currency firm during the Asian session.

Most traders, however, were on the sidelines awaiting the issue tonight of U.S. non-farm payrolls data for clues on the likely scale of interest rate action by the Federal Reserve.

Further evidence of a tighter labor market would fuel expectations of aggressive monetary tightening, and likely push the dollar higher against Asian currencies.

Expectations for the jobs report center on a 310,000 rise in employment in April after a 416,000 rise in March, and a fall in the jobless rate to 4.0 percent from 4.1 percent.

The federal funds rate is 6 percent now, but analysts expect it will be lifted to 7 percent, or more, by year-end to keep inflation in check. Most expect the Fed's policy-making arm, the Federal Open Market Committee, to hike the fed funds rate 50 basis points when it next meets May 16.

The Singapore dollar, which often tracks the currency of Japan - a key trading partner - rebounded with the yen after posting a nine-week low Thursday against the U.S. dollar.

Late in the day, the U.S. currency was quoted at S$1.7190, down from S$1.7240 a day earlier.

"It's tracking the dollar-yen movement," a dealer at a U.S. brokerage said. "But trading is pretty listless with a lot of traders out for the holidays," he added.

Speculation the Monetary Authority of Singapore may intervene to support the local unit around S$1.7250 - as traders say it did in recent months - also helped it rise.

The Thai baht, however, failed to benefit from the strengthening yen in offshore trade.

Foreign speculators took advantage of low baht liquidity, due to the holidays in Japan and Thailand, to buy dollars in the hope of making profits in the short-term.

Thai Deputy Finance Minister Pisit Leeahtan attempted to soothe jittery financial markets, saying the baht's weakness likely will be only temporary.

Pisit, speaking to reporters on the sidelines of an Asia Development Bank annual meeting in Chiang Mai, said the baht's decline Thursday to a five-month intraday low against the dollar at 38.560 baht was "something of a surprise."

Exports and other economic indicators are doing well, meaning the baht is out of kilter with fundamentals, he said.

The dollar was at 38.455 baht from 38.425 baht a day earlier.

Elsewhere, the New Taiwan dollar rose slightly, helped by a 3.3 percent jump in local stock prices. The U.S. dollar was quoted at NT$30.648, compared with NT$30.699 at the previous close.

The Indonesian rupiah and Philippine peso were barely changed.

Late in the day the dollar was at Rp 7,967, down from Rp 7,975 late Thursday, and unchanged at 41.280 pesos.

Philippine Central Bank Governor Rafael Buenaventura said the monetary board next week will "most likely" leave the overnight borrowing rate unchanged at 9 percent after inflation came in at lower-than-expected 3.7 percent year-on-year in April.

However, a 50-basis-point hike in the U.S. may force a response from Philippine monetary officials for fear of sharp decline in the local currency.

The South Korean won didn't trade because of a government holiday. The dollar ended Thursday at 1,111.0 won.