Asian currencies mixed late; Brazil deal helps sentiment

Asian currencies mixed late; Brazil deal helps sentiment

Alan Yonan Jr., Dow Jones, Singapore

Asian currencies were mixed Thursday as a late-session slump in
the yen caused the New Taiwan dollar, South Korean won and
Philippine peso to reverse course and close weaker.

But the Singapore dollar, Thai baht and Indonesian rupiah
strengthened modestly.

Regional currencies were fairly well supported for most of the
session as the approval of a US$30 billion rescue package for
Brazil from the International Monetary Fund (IMF) boosted
sentiment toward emerging markets worldwide, analysts said.

However, the U.S. dollar's steady climb against the yen to
120.80 yen from around 120 yen in the last few hours of Asian
trading triggered some spillover U.S.-dollar buying against other
regional currencies.

The new IMF funding comes on top of existing loans the fund
has approved for Brazil in an effort to stabilize a deepening
economic crisis in South America.

The unusually large loan is intended to forestall a possible
default on Brazil's $264-billion public debt, and insulate the
country's vulnerable finances from the uncertainty of an October
presidential election.

"This is great news for emerging markets," said Claudio Piron,
currency strategist at Standard Chartered Bank in Singapore.

"Whenever the IMF puts money on the table it helps support
risk appetites globally," he added.

The Brazilian loan, negotiated by the IMF management and
endorsed by the U.S. Treasury Department, is expected to be
formally approved by the IMF board next month.

The South Korean won was pulled off morning highs as offshore
investors bought U.S. dollars in line with the U.S. currency's
afternoon rally against the yen.

The U.S. dollar finished at 1,206.8 won, above Wednesday's
close at 1,203.2 won.

Selling of Korean shares by foreign investors also dented
sentiment toward the won, traders said. Foreigners were net
sellers of 76.8 won billion in shares, which is likely to boost
U.S.-dollar demand in coming sessions.

The New Taiwan dollar reversed early gains against its U.S.
counterpart as it followed the yen lower. The U.S. dollar closed
at NT$33.998, up from NT$33.895 Wednesday.

"The Taiwan dollar followed the yen today," said a dealer at a
foreign bank in Taipei. The local unit was slightly stronger for
most of the day as the yen gained ground against the U.S.
currency, but when the yen softened late in the day the New
Taiwan dollar followed suit.

The Singapore dollar strengthened slightly in thin trade, but
was pulled off its highs by the yen's decline.

The U.S. dollar was quoted at S$1.7690 late in Asia, down from
S$1.7707 late Wednesday.

Trading was confined to a tight range in thin pre-holiday
trade. Financial markets in Singapore will be closed Friday for
National Day.

The U.S. dollar opened around S$1.7620 and traded in a
S$1.7670-S$1.7680 range for much of the afternoon before
strengthening late in the session in tandem with its gains
against the yen.

Against the peso, the U.S. dollar closed at 51.770 pesos in
thin trading. Volume fell to $65.5 million from $214.3 million
Wednesday.

The U.S. dollar's performance against the peso mirrored its
moves against many other regional currencies, trading weaker in
the morning session, then stronger in the afternoon.

Corporate U.S.-dollar demand was thin as companies remained
mostly sidelined ahead of the public holiday in Singapore, a
regional foreign exchange trading center.

The U.S. dollar closed below Rp 9,000 for the first time in
nearly three weeks following foreign exchange market intervention
by the central bank.

Near the end of Asian trading the U.S. dollar was quoted at Rp
8,985, down from Rp 9,080 late Wednesday.

Dealers said Bank Indonesia found little resistance to drive
the U.S. dollar lower, with many market participants still keen
to hold on to the rupiah given the sizable interest-rate
differential between the two currencies.

The one-month rupiah deposit rate is currently around 14
percent, whereas the U.S. dollar deposit rate is less than 2
percent.

The Thai baht was slightly stronger in lackluster trade. Late
in Asia the U.S. dollar was quoted at 42.475 bath, down from
42.535 bath late Wednesday.