Asian currencies mostly up, further gains expected

Asian currencies mostly up, further gains expected

Nirmala Menon, Dow Jones, Kuala Lumpur

Most Asian currencies continued to rally Tuesday, as
confidence in the U.S. dollar wavered amid the steady stream of
U.S. corporate accounting controversies.

Asian currencies once again took their cue from the yen, which
was supported after Japanese Finance Minister Masajuro Shiokawa
once again made comments that gave the impression he is resigned
to further U.S. dollar weakness. Tuesday, in an effort to explain
previous remarks, Shiokawa said, "I meant to say that as there is
speculation that the dollar will fall (to 115 yen), we must stop
it from going there."

The comments appeared to support notions in the market that
Japan has drawn a line in the sand at 115 yen, which could give
speculators room to push the dollar lower from around 118.30 yen
late Tuesday in Asia, down from 118.57 yen late Monday in New
York.

The dollar's decline pulled it lower against most Asian
currencies, although the Indonesian rupiah bucked the region-wide
trend, falling due to strong dollar demand from local
corporations preparing to pay back loans denominated in the U.S.
currency.

The Korean won chalked up a new 19.5-month high on the back of
the yen's gains and on remarks by a presidential advisor. Lee Ki-
ho, special adviser to President Kim Dae-jung for economy, labor
and welfare, was quoted on Internet news site Edaily as saying
that the government's principle is "having market forces dictate"
currency levels.

Those comments helped push the dollar to an intraday low of
1,181.9 won, and the U.S. currency ended at 1,182.2 won, down
from 1,191.4 won Monday, its lowest closing level since closing
at 1,176.9 won on Nov. 22, 2000.

Meanwhile, the Singapore dollar was also stronger, briefly
reaching its highest level since late September. The U.S. dollar
ended the session at S$1.7600, down from $1.7625 late Monday,
after touching an intraday low of S$1.7589 in early trade, its
lowest level since Sept. 24, 2001.

Near-term support for the pair is pegged at S$1.7580, with
resistance at S$1.7730, traders said.

The Thai baht hit a new 22-month high at the close of spot
trading due to stop-loss dollar selling after the U.S. currency
fell below key support, traders said.

The dollar ended the bumpy day at its intraday low of 41.30
baht, down from 41.45 baht Monday's close.

"The greenback dropped to 41.33 baht in the morning, but then
staged a brisk rebound to 41.41 baht within 10 or 20 minutes,"
said a trader at a foreign bank, "A U.S. bank seemed to be behind
that quick swing," he said, adding that the dollar later
surrendered those gains.

The dollar also fell against the Philippine peso, slipping to
50.290 pesos from 50.470 pesos. Traders said some banks sold the
U.S. currency on an expected break in the Senate leadership
impasse, with the administration likely to clinch a majority in
the Upper House.

The New Taiwan dollar's upward momentum remained intact,
helped in part by a widening of Taiwan's trade surplus to US$1.65
billion in June from US$1.60 billion in May.

The Taiwan central bank, which regularly intervenes to stave
off fluctuations in the local currency, bought around US$350
million throughout the day, traders said.

Participants said they expect the New Taiwan dollar to test
NT$33.200 on Wednesday, though much may depend on the yen's
movements. The dollar closed at NT$33.380, from NT$33.513 Monday.

The Indonesian rupiah once again bucked the regional trend as
local companies accumulated dollars.

"Although they don't have to pay offshore debts immediately,
some local companies apparently want to cover their dollar needs
on concerns that the political climate will heat up," ahead of
next month's annual session of the country's highest legislative
body, a dealer said.

The dollar was quoted at Rp 8,910 late Tuesday, from Rp 8,900
Monday.