Asian currencies mostly down on yen's sharp drop

Asian currencies mostly down on yen's sharp drop

SINGAPORE (Dow Jones): The floundering Japanese yen late Friday dealt a further blow to most Asian currencies, already staggering under the weight of their countries' economic and political woes, market watchers said.

The only currency which bucked the downtrend was the Thai baht, which rebounded on liquidation of long dollar positions late in the day, after having been dragged down by the yen's weakness in early trading.

The dollar broke above Y118.00 for the first time in 18 months Friday as growing pessimism toward the Japanese economy encouraged yen selling. Strong signals by Japanese monetary officials welcoming a weaker yen also provided the greenlight for the currency's decline.

Around 0755 GMT (2:55 a.m. EST), the dollar was at Y118.13, after having come off from its intraday peak of Y118.25, the highest since July 22, 1999.

The South Korean won and the New Taiwan dollar felt the brunt of the yen's weakness. The two currencies usually track the yen since their economies compete in similar export markets.

In Seoul, the dollar edged up to 1,281.10 won, from Thursday's close of 1278.10 won.

Against the New Taiwan dollar, the U.S. currency was at NT$32.699, up from NT$32.635 Thursday.

In Southeast Asia, the Indonesian currency, which has been recently marginalized in offshore currency markets, will likely come under assault next week as political temperatures are expected to rise.

Fears that rumored antigovernment protests next week could turn violent weighed on the rupiah, although dollar-selling by state banks helped the Indonesian currency recover from its intraday low of Rp 9,650 against the dollar, dealers said.

Parliament Monday resumes its probe of two financial scandals linked to President Abdurrahman Wahid, which might renew fears of impeachment and in turn, roil the rupiah.

The graft trial of Bank Indonesia Governor Sjahril Sabirin, due to begin next Wednesday, is also making investors cautious, dealers said.

Late in the day, the dollar was at Rp 9,608, up from Rp 9,588 late Thursday.

"We will see Rp 9,750 to Rp 9,800 by the end of the month," said a dealer at a European bank.

The slump in Asian foreign exchange markets cast a pall on the Singapore dollar and the Philippine peso.

Against the Singapore dollar, the U.S. currency was at S$1.7342, up from S$1.7338 late Thursday.

On the Philippine Dealing System, the dollar closed at 51.59 pesos, higher than 51.325 pesos Thursday.

After failing to make headway above 43.600 baht, participants unwound their long dollar positions ahead of the weekend, helping the Thai currency regain its footing, dealers said.

Bank of Thailand Friday ruled that financial institutions selling foreign currency for repayment and servicing of clients' foreign debt will be required to obtain written evidence from the clients of the loans and terms.

This provided the market with an excuse to lock in their profits, after pushing down the baht in the past two days, dealers said.

The dollar eased to 43.415 baht, from 43.525 baht late Thursday.