Asian currencies mixed late amid debate on Fed rate meeting

Asian currencies mixed late amid debate on Fed rate meeting

SINGAPORE (Dow Jones): Asian currencies were mixed late
Tuesday as participants refrained from taking aggressive
positions in the market, amid uncertainty over the magnitude of
an anticipated U.S. Federal Reserve interest rate cut, dealers
said.

Position squaring and the yen's gains the past two days
bolstered the South Korean won, Singapore dollar and New Taiwan
dollar, dealers said. The Philippine peso and Thai baht were
slightly weaker.

The rupiah ended slightly lower in thin trade Tuesday on mild
dollar demand by state banks, traders said.

The dollar closed at Rp 11,370, up slightly from its close
Monday at Rp 11,365; it hit an intraday high of Rp 11,375.

Traders said a further attempt by President Abdurrahman Wahid
to seek a compromise to save his presidency had no impact on the
market.

The Australian media Tuesday reported Wahid as saying he hoped
to meet Amien Rais, chairman of Indonesia's highest legislative
body, the People's Consultative Assembly, in Darwin Thursday.

Rais later said he had no intention of holding further
discussions with the president.

Dealers expect trading to remain quiet until the August 1
impeachment hearing unless there is an unexpected political
compromise, or Wahid is forced out of office early.

Dealers expect trading to be stuck in a tight Rp 11,370-Rp
11,390 range Wednesday.

The Federal Open Market Committee will announce its decision
on interest rates Wednesday, when its two-day policy meeting
concludes.

Market participants appeared to be evenly divided on whether
the Fed will lower interest rates by 25 basis points or 50 basis
points.

A growing number, however, believe that the Fed has the
latitude and the need to continue cutting rates aggressively to
jumpstart the U.S. economy.

It has already lowered interest rates five times this year,
each by half a percentage point, to help revive the economy.

With most Asian currencies fluctuating within narrow ranges,
the South Korean won led the advance in the region.

The yen's gains countered the downward pressure on the won
from a 1.6% slide on the local bourse, dealers said.

The dollar finished at 1,299.0 won, down from Monday's close
of 1,303 won.

Against the yen, the dollar was quoted at 123.42 yen at 0845
GMT (3.45 p.m. Jakarta time), below 123.75 yen in New York late
Monday.

The yen's gains and fears of central bank intervention kept
the Singapore dollar buoyed at S$1.8183 against its U.S.
counterpart, compared with S$1.8184 late Monday, dealers said.

The New Taiwan dollar was inspired by the yen's rise, despite
a 2.4% fall on the local bourse, dealers said.

The U.S. currency ended at NT$34.413, down from Friday's
NT$34.434. Taiwan's financial markets were closed Monday for a
holiday.

The Philippine peso closed a shade lower, as fears of testing
the central bank's resolve kept a rein on the currency's decline,
despite market worries about the domestic security situation and
the hostage crisis in the south, dealers said.

The dollar closed at 52.270 pesos on the Philippine Dealing
System, slightly higher than 52.265 pesos Monday.

Fears that violence could break out ahead of the arraignment
of former leader Joseph Estrada on perjury charges, scheduled
Wednesday, cast a shadow on the currency, dealers said.

The Thai currency was slightly weaker at 45.219 baht per
dollar, compared with 45.160 baht late Monday.

The baht remained trapped in a tight trading band, as the
market remained wary of stricter foreign exchange reporting rules
on nonresident accounts, dealers said.

The baht had strengthened to 45.100 baht earlier, but lost
ground as offshore banks and local importers picked up dollars,
dealers said.