Asian currencies mostly down on U.S. rate hike fears

Asian currencies mostly down on U.S. rate hike fears

HONG KONG (Dow Jones): Unease over the impact of higher U.S.
interest rates on Asian economies, tumbling local stock markets
and a data shock in Singapore combined to force most regional
currencies lower Monday.

Investors who had bought into Asian currencies at the start of
the year in anticipation of handsome appreciation accelerated the
unwinding of their long positions, and in some cases even began
to reverse them by selling local currencies short, according to
dealers.

Regional markets have reacted nervously to the hawkish stance
on inflation adopted last week in Congressional testimony by U.S.
Federal Reserve Chairman Alan Greenspan.

Friday's drop on Wall Street was mirrored by declines in local
equity markets, which in turn weighed on regional currencies.

The impact on the Singapore dollar was magnified by the
announcement that non-oil domestic exports, a key leading
economic indicator, grew by only 7.6 percent in January,
massively undershooting the growth of around 26 percent expected
by the market.

Traders and investors moved rapidly to buy the U.S. dollar
against its Singapore counterpart following the release of the
disappointing data, forcing to the U.S. dollar to a high of
S$1.7107, its highest level since late September.

As Asian dealing drew to a close the U.S. currency had
retreated from its high to trade at S$1.7068. At that level,
however, the U.S. dollar was still higher than S$1.7047 late
Friday.

Among other Southeast Asian currencies, the Thai baht followed
the Singapore dollar lower, although with markets in Bangkok
closed Monday for a holiday, activity in the offshore market was
muted.

Late on Monday, the dollar was quoted against the baht at
38.080 baht, up from 38.03 baht as trading wound down Friday.

The Philippine peso initially followed the other regionals
down, but recovered most of its early losses on position-squaring
late in the session.

At the close, the dollar was quoted at 40.680 pesos, up a
fraction compared with 40.670 pesos Friday.

The Indonesia rupiah inched a touch higher, after testing
toward the lower reaches of its recent range last week. Late in
Asia, the dollar was at Rp 7,425, compared with Rp 7,439 late
Friday.

In North Asia the won saw heavy selling in the offshore market
in non-deliverable forwards as investors covered their exposure
to the South Korean market.

The local currency was also sold against the U.S. dollar in
Seoul, where the stock market tumbled by nearly 4 percent Monday.

Intraday trading saw the dollar bid as high as 1,134.20 won,
although at that level the U.S. currency attracted selling
interest from investors who retain their fundamentally positive
outlook on South Korea's economic prospects.

At the close the dollar was quoted at 1,131.50 won, up from
1,129.00 won Friday.

The New Taiwan dollar crept slightly higher Monday, as the
local authorities kept a tight lid on market volatility. At the
close the U.S. currency was at NT$30.707, compared with NT$3.720
at the end of Saturday's session.