Asian currencies mostly up on modest yen support

Asian currencies mostly up on modest yen support

SINGAPORE (Dow Jones): Most Asian currencies were slightly higher late Tuesday, finding only modest support from the yen's bounce as participants braced for another roller-coaster ride on Wall Street this week.

The South Korean won was the biggest beneficiary of the yen's advance. The Singapore dollar, the New Taiwan dollar and the Thai baht were marginally higher.

The Indonesian rupiah extended its losses against the dollar Tuesday on concerns over rising political tension.

After reaching an intraday high of Rp 10,925 the dollar closed at Rp 10,865, up from Rp 10,825 Monday.

Dealers however, said the dollar's rise was driven by speculation and not genuine demand from local companies, which caused the dollar to come off its intraday high.

"Speculators built dollar-long positions on expectations that local companies would place large dollar bids," said a dealer with a foreign bank. "But there were no large orders for buying the dollar from local companies."

Dealers noted that Bank Indonesia sold around $25 million Tuesday to defend the local unit.

The dollar fell by more than a yen in Asian trade, as reported remarks by a top Japanese finance ministry official said Japan will not weaken its currency to boost its economy triggered a layer of stop-loss sell orders.

After threatening to test Y123 support, the dollar recouped part of its earlier losses to trade around Y123.36 at 0839 GMT (4:39 a.m. EDT). The dollar was quoted around Y124.48 late Monday in New York.

Despite the dollar's sharp fall against the yen, support for other Asian currencies was mild amid renewed concerns over rising oil prices and the growing pessimism on Wall Street.

With the U.S. corporate reporting season underway, market participants were bracing for some disappointment, with the overnight profit warning from high-technology bellwether Cisco Systems expected to set the tone.

"If you get bad news on that front, and it affects Nasdaq, it will then have an impact on Asian currencies," said Mansoor Mohi- uddin, a regional foreign exchange strategist at UBS Warburg.

The Singapore dollar was quoted at S$1.8068 against its U.S. counterpart, slightly higher than S$1.8077 late Monday.

UBS Warburg's Mohi-uddin said the Singapore dollar - along with the Philippine peso, and to a lesser extent the baht - will continue to be pressured by concerns over the risk of a devaluation of the Malaysian ringgit, despite assurances by the government and the central bank that the peg will stay.

Although the recent slump in Asian currency markets has prompted most analysts to say that the ringgit is relatively overvalued, Prime Minister Mahathir Mohamad dismissed such notions Tuesday, saying that the currency remains competitive.

Still, Mohi-uddin noted that Malaysian banks have been buying U.S. dollars against the Singapore currency heavily over the past few weeks, apparently to hedge against the risk of the ringgit's devaluation.

Inspired by the yen, the Thai currency was at 45.515 baht to the dollar, slightly stronger compared with 45.585 baht late Monday.

In Seoul, the dollar remained buoyed above 1,320 won, despite the yen's sharp gains. The dollar finished at 1,324.1 won, down from Monday's close of 1,329.1 won.

Against the New Taiwan dollar, the U.S. currency closed at NT$32.926, down from NT$32.931 Monday.

On the Philippine Dealing System, keen corporate demand for the U.S. currency pushed the dollar higher to 50.30 pesos at the close, from 50.20 pesos Monday.