Asian currencies mostly down, rupiah slightly firmer

Asian currencies mostly down, rupiah slightly firmer

SINGAPORE (Dow Jones): Most Asian currencies sagged late Thursday, with the South Korean won extending its recent inexorable decline as the market grew immune to the central bank's hackneyed verbal mediation, dealers said.

The New Taiwan dollar also lost some ground, falling for the ninth consecutive session to a fresh 19-month low.

In Southeast Asia, the Philippine peso and the Thai baht were weaker, while the Singapore dollar and the Indonesian rupiah were slightly firmer.

The rupiah ended slightly stronger in Asian trade Thursday as participants unloaded long-dollar positions.

Traders said the market was squaring positions despite continued concerns over the resignation last week of Bank Indonesia's senior governors, amid political wrangling over the central bank's status.

The dollar traded in a narrow range Thursday and closed at Rp 9,420 in Asia, down from Rp 9,450 at Wednesday's close.

"The market was caught long, so we saw some participants unloading their positions," said a foreign bank trader.

However, investors remain cautious over Bank Indonesia's policy after the resignation of acting Governor Anwar Nasution and four other governors, he said.

Thanks to the rupiah, the Singapore dollar was firmer at S$1.7548 against its U.S. counterpart, compared with S$1.7564 late Wednesday.

Analysts said the South Korean won and the New Taiwan dollar will continue to be undermined by the cloudy outlook for the semiconductor sector, which their economies depend on, and easing demand from the U.S., which is slowing the pace of these countries' exports.

And as they compete for shrinking demand for their exports, both currencies will also weaken in sync with the Japanese yen. The yen is widely expected to languish against the dollar, after Japan's political disarray drove it through the key Y110 support, analysts added.

Domestically, political uncertainties in Taipei and hiccups in South Korea's restructuring efforts will drive away foreign investors, who have already turned skittish toward emerging markets in recent months, said Lo.

Leading the descent, the won lost 1.4 percent to hit its lowest level in more than a year due to local and offshore dollar demand, despite market rumors of central bank intervention, which subsequently appeared unfounded, and the trite verbal mediation, dealers said.

The dollar finished at 1,193 won, its highest close since Nov. 2, 1999, when it ended at 1,193.30 won. The dollar closed Wednesday at 1,176.90 won.

Against the New Taiwan dollar, the U.S. currency closed at a new 19-month high of NT$32.931, up from NT$32.870 Wednesday, as foreign equity funds spooked by domestic political uncertainties and a slowing economy flowed out Taipei.

Reversing from its recent gains, the Philippine peso retreated Thursday on expectations that the central bank will cut its policy rates as early as Friday, during its board meeting, dealers said.

The dollar closed at 49.380 pesos on the Philippine Dealing System, up from Wednesday's close of 49.120 pesos.

After rebounding sharply in New York trading hours Wednesday, the Thai baht lost ground as tight liquidity in the forward market eased, dealers said.

Around 0915 GMT, the dollar was at 43.855 baht, up from the overnight low of 43.35 baht Thursday.

Higher offshore swap premiums, which raises short-term funding costs, had recently prompted offshore players to cover their short baht positions, fueling the currency's gains.

Thai central bank Governor Chatu Mongol Sonakul said Thursday Bank of Thailand reserves the right to intervene in the market, but will do so as little as possible, implying that the central bank will likely tolerate the baht's current levels.