Asian currencies mixed on volatile yen moves

Asian currencies mixed on volatile yen moves

TOKYO (Dow Jones): Asian currencies were mixed late Monday as the yen rebounded against the U.S. dollar after the Japanese currency gave back some of last week's gains earlier in the holiday-thinned trading session.

With national holidays in Singapore, Thailand, Indonesia and other parts of Asia, the Asian currencies mostly tracked the yen's volatile moves amid the thin markets.

The yen initially fell against the U.S. currency on dollar short-covering from market players after the end of Japan's Golden Week holidays and on some disappointment over Japanese Prime Minister Junichiro Koizumi's policy speech.

The lack of fresh developments in Koizumi's first policy speech as Japan's new prime minister was the main driver behind the late dollar/yen buying as many players had expected new initiatives in his speech, dealers said.

However, the yen later rebounded on liquidation of long dollar positions by market participants preparing for further yen strengthening in the near term, amid ongoing expectations that foreign investors will continue to buy Japanese equities in anticipation of progress on the nation's structural reforms.

Late Monday, the dollar was at Y121.29, marginally higher from Y121.25 late Friday in New York.

In Manila, the Philippine peso lost some ground against the U.S. dollar as rising fears of political-related violence outweighed the positive impact from President Gloria Macapagal Arroyo's lifting of the state of rebellion in the nation.

Late Monday, the dollar was at 50.478 pesos, up from 50.380 pesos last Friday.

The dollar was also pressured somewhat by last Friday's release of extremely weak U.S. employment data, though the U.S. currency managed to hold up relatively well on expectations that the U.S. Federal Reserve will cut interest rates further to guide a U.S. economic turnaround.

The April non-farm payrolls report showed its sharpest drop since 1991, posting an unexpected 223,000 fall. The April unemployment rate, meanwhile, rose to 4.5 percent from 4.3 percent in March.

While the poor U.S. employment data stoked fears that the U.S. could slide into a recession, the data also indicated that another 50-basis-point cut from the U.S. Fed is on the cards at the next Federal Open Market Committee meeting on May 15, dealers said.

"Players now expect the Fed to cut rates by 50 basis points on May 15 in light of the dour U.S. employment data. This rate cut should help to bolster the flagging U.S. economy, and by extension, the U.S. dollar," said a European bank dealer in Tokyo.

In Taipei, the New Taiwan dollar gained slightly against its U.S. counterpart on rumored buying of the local currency by Taiwan's central bank and on the yen's rebound.

The U.S. dollar was last at NT$32.879, down from NT$32.884 last Friday.

Mirroring the yen's rebound, the South Korean won retraced its earlier losses against the U.S. dollar as some players bought back the won late in the Asian trading session.

Late in Seoul, the dollar was at 1,296.6 won, down from last Friday's close of 1,298.2 won.

Given the national holiday in Singapore, the U.S. dollar was last at S$1.8255, up from S$1.8213 last Friday.

In Bangkok where financial markets were also closed for a national holiday, the U.S. dollar was last at 45.655 baht, up from 45.565 baht late Friday.

With the national holiday in Indonesia, the U.S. dollar was unchanged at Rp 10,950.