Asian currencies mixed, rupiah slightly lower

Asian currencies mixed, rupiah slightly lower

SINGAPORE (Dow Jones): The Japanese yen's overnight gains
buoyed several Asian currencies late Friday, although market
participants were largely noncommittal amid anxieties over what
moves monetary authorities in Thailand and Singapore would make,
dealers said.

The Singapore dollar, the South Korean won and the New Taiwan
dollar were stronger, while the Thai baht, the Indonesian rupiah
and the Philippine peso were slightly weaker.

The Thai baht slipped as waning fears of rigid foreign
exchange controls prompted short dollar covering, dealers said.
Such fears had earlier been fueled by the central bank's more
stringent disclosure requirements on foreign exchange trades for
onshore banks.

The dollar was at 42.475 baht, up from 42.425 baht late
Thursday.

Market participants were awaiting the outcome of the Thai
central bank's meeting with commercial bank treasurers Friday.
Bank of Thailand was to clarify its new disclosure requirements
on foreign exchange transactions, effective March 1, at the
meeting.

Most participants don't expect any surprises from the meeting
as there is little need for tighter rules with the baht having
recovered from its lows late last year. However, they aren't
taking any chances and refrained from taking any new positions,
dealers said.

The Indonesian rupiah closed a touch lower on Friday as
investors bought the dollar in anticipation of the start of an
offshore non-deliverable forward market next week.

The rupiah NDF market is an attempt by offshore banks to get
around new Bank Indonesia rules which ban the transfer of rupiah
offshore, and stop speculation against the local currency in the
forward market.

A rupiah NDF market gets around the rules as it settles
contracts only in dollars.

But it could still have an effect on the rupiah in the spot
market, traders said. As players take out positions against the
rupiah in the NDF, this will have a sentiment effect on the
rupiah spot onshore. It could also lead to arbitraging between
the different rates.

"If the NDF goes higher the spot, onshore will also go
higher," a local trader said.

In anticipation that the NDF market will lead to a renewed
fall in the rupiah - after a period of stability following the
ban on offshore transfers - investors bought dollars in mild
trade Friday.

The dollar ended Asian trading at Rp 9,610, higher than Rp
9,600 at Thursday's close. The U.S. unit is seen testing Rp 9,625
next week.

Investors want to use the NDF market to effectively short the
rupiah amid concerns over political stability. President
Abdurrahman Wahid's 15-month-old government is losing support in
Parliament, which wants him to step down over two financial
scandals.

DBS Bank said the general tone of the market is to buy dollars
once it becomes clear that the new disclosure requirements for
onshore parties on foreign exchange trades won't be a repeat of
Indonesia's currency regulations.

Indonesia shocked market participants with regulations imposed
about a month ago which effectively wiped out the offshore rupiah
market.

At 0915 GMT, the Singapore dollar strengthened to S$1.7409
against its U.S. counterpart from S$1.7447 late Thursday,
inspired by gains in the yen, dealers said.

Late in the day, the yen rallied on reported comments in a
German newspaper from U.S. Treasury Secretary Paul O'Neill that
the Bush administration won't pursue a strong dollar policy.

The dollar was quoted at Y114.80, down from Y115.47 late
Thursday in New York. The dollar was at Y116.16 late Thursday in
Tokyo.

Before the yen's sharp advance, participants were sitting
tight ahead of the Monetary Authority of Singapore's policy
statement Feb. 22.

Trading in the won and the New Taiwan dollar had come to a
close when the yen spiked higher late in the day on O'Neill's
reported remarks. Still, both currencies found reprieve from the
yen's overnight gains, dealers said.

The dollar finished at 1,243.5 won, down from Thursday's close
of 1,247 won.

Against the New Taiwan dollar, the U.S. currency closed at
NT$32.299, lower than NT$32.344 Thursday.

On the Philippine Dealing System, the dollar closed at 47.550
pesos, up from 47.490 peso Thursday.