Asian currencies mixed, rupiah climbs to six-month high

Asian currencies mixed, rupiah climbs to six-month high

Netty Ismail, Dow Jones, Singapore

Asian currencies were mixed late Tuesday, mostly off their
intraday lows, as the yen reclaimed some ground.

The Singapore dollar, South Korean won and New Taiwan dollar
had succumbed to the yen's slide toward 133.50 yen to the U.S.
currency in early trading.

While the won and New Taiwan dollar later regained their
footing to close stronger - along with the yen's bounce - the
Singapore dollar continued to fall by the wayside as U.S. banks
seemed to be caught short in the U.S. currency, dealers said.

Ironically, the currencies of South Korea and Singapore -
which are expected to lead the rebound among the region's
currencies in the second half of this year - have been feeling
the brunt of the yen's recent weakness, noted David Simmonds, a
regional currency strategist at Salomon Smith Barney/Citibank.

The Singapore dollar, the won, and to a lesser extent, the New
Taiwan dollar, will continue to slump against the dollar in the
second quarter, with the yen expected to flounder toward 137 yen
-138 yen against the U.S. currency, Simmonds added.

But hopes of an economic rebound in the second half of the
year will somewhat mitigate the onslaught from the yen on these
currencies, he added.

As a result, the Asian currencies will continue to outperform
the yen, even as they depreciate against the U.S. dollar, he
said.

"I like Asian currencies, and would like to be positioning for
some strength, but you ain't going to make much money against the
dollar as the yen move against the dollar takes shape," said
Simmonds.

The speed of the Singapore dollar's slide to two-month lows
caught several participants off guard, as they had been betting
for a near-term rebound in the Singapore currency, observers
said.

But the U.S. dollar continued it ascent, "obliging stale (U.S.
dollar) shorts to be squaring out at this stage," said Simmonds.

Still, "I don't think it's a particularly big move for
dollar/Sing," said Simmonds. "It's a correction within what's
still a recognizable range, catching people short in U.S.
dollars."

Dealers said U.S. banks led the buying spree in U.S. dollars,
even as the yen regained its footing.

The U.S. dollar was quoted at S$1.8438 at 0930 GMT (4.30 p.m.
Jakarta time), higher than S$1.8367 late Monday. The U.S. dollar
hit an intraday high of S$1.8445 earlier Tuesday.

After peaking at 133.47 yen in early trading, the dollar was
quoted at 132.86 yen late Tuesday, below 133.37 yen late Monday
in New York. The dollar was at 132.79 yen late Monday in Tokyo.

The South Korean won found additional respite from dollar
sales by exporters, after the U.S. currency hit an intraday high
of 1,333.5 won, dealers said.

"We think dollar/won is a sell on rally," said the head of
Asian currency trading at a European bank in Singapore.

The U.S. currency closed at 1,329.3 won lower than 1,331.5 won
Monday.

The New Taiwan dollar finished at NT35.037 against its U.S.
counterpart, slightly stronger than NT$35.046 Monday.

The Indonesian currency continued to power ahead, hitting a
six-month high of Rp 9,590 to the dollar, on expectations of
capital flows from the sale of Bank Central Asia, dealers said.

Late in the day, the dollar was quoted around Rp 9,620, weaker
than Rp 9,720 late Monday.

Dealers in Jakarta believe U.S. investment fund Farallon
Capital had sold dollars to pay for its acquisition of the
Indonesian government's 51 percent stake in BCA - the country's
largest retail bank, dealers said. The first payment is due
Thursday.

Even though the rupiah is now back on foreign investors' radar
screens, doubts about the currency's ability to sustain its
recent rally have started to creep in. Whether the rupiah's gains
will continue in part depends on the government's commitment to
economic reforms and its asset sales, analysts said.

The Thai currency was stronger at 43.360 baht to the dollar,
compared with 43.405 baht late Monday.

On the Philippine Dealing System, the dollar closed at 51.145
pesos, up from 51.120 pesos Monday.