Asian currencies mostly higher late, U.S. rate cut foreseen

Asian currencies mostly higher late, U.S. rate cut foreseen

SINGAPORE (Dow Jones): Most Asian currencies were stronger
against the dollar Wednesday, helped by expectations of another
interest rate cut in the U.S.

With the exception of the Indonesian rupiah, all regional
currencies strengthened Wednesday.

Market participants widely expect Federal Reserve policymakers
will lower short-term interest rates by 50 basis points to 5.5
percent Wednesday in an effort to reverse the U.S. economic
downturn.

While lower U.S. interest rates will help Asian markets in the
near-term, analysts caution that continued deterioration of the
U.S. economy will weigh on Asian economies.

The region, which relies heavily on exports to the U.S. to
generate economic growth, has already begun to feel the effects
of the U.S. slowdown. A full-blown recession in the U.S. would
have an even bigger impact on Asian economies and make it more
difficult for them to attract much-needed foreign investment.

In addition, political uncertainty continues to influence
investors' views about Asia, especially in Indonesia where
investigators are looking into charges of corruption against
President Abdurrahman Wahid.

"No one is in a hurry to be very bullish about Asian
currencies for the medium term," DBS Bank said in a research
report. "Asian economies will not be spared if the U.S. economy
suffers more knocks."

The Indonesian rupiah closed marginally lower Wednesday on
corporate dollar demand sparked by concerns over expected massive
antigovernment demonstrations Thursday.

Dealers said late dollar selling by several state banks lifted
the rupiah from its intraday low of Rp 9,455.

The dollar closed at Rp 9,447, up slightly from Rp 9,435 at
Tuesday's close.

"The market remained nervous over possible riots Thursday,"
said a trader with a Japanese bank.

A parliamentary committee report said President Abdurrahman
Wahid knowingly broke the law to raise money for the humanitarian
crisis in the troubled province of Aceh.

The 500-member Parliament will give its official response to
the report Thursday. A decision to accept the report's findings
and issue a warning letter would mark the first step toward
impeachment proceedings against Wahid.

Prospects for lower U.S. rates along with rising share prices
boosted the South Korean won.

The dollar finished at 1,259.0 won, down from 1,265 won
Tuesday.

The dollar had risen as high as 1,264.5 won in intraday
trading, but was knocked back by the surge in local stocks,
dealers said. The country's main index rose 4.5 percent on heavy
foreign buying on both futures and cash markets.

The Philippine peso shrugged off news that former President
Joseph Estrada will question the legality of his ouster from
office.

Estrada said Wednesday he remains the "duly elected president"
of the Philippines and President Gloria Macapagal-Arroyo is "just
an acting president."

The peso gained on month-end position squaring by banks and
lack of commercial dollar demand, dealers said. The dollar closed
at 48.975 pesos, down from 49.600 pesos Tuesday.

The Thai baht got a boost from further signs that the
country's drawn-out election process neared resolution Wednesday.

Thaksin Shinawatra, whose Thai Rak Thai Party won a landslide
victory in the Jan. 6 general election, invited the small Chart
Thai Party to join him in a three-party coalition along with the
New Aspiration Party. Together the three parties would control
more than 320 seats in the 500 seat lower house of parliament.

Late in Asian trading, the dollar was quoted at 42.505 baht,
down from 42.655 baht late Tuesday.

The U.S. dollar closed at NT$32.397, down from NT$32.435
Tuesday. It was the New Taiwan dollar's highest close since
NT$32.278 on Nov. 18.