Asian currencies plunge as local firms rush to buy dollars

Asian currencies plunge as local firms rush to buy dollars

HONG KONG (Dow Jones): Most Asian currencies dropped steeply
during local trading hours Monday as dollar-supportive
intervention by the Bank of Japan triggered an end-of-the-month
rush to acquire the U.S. currency.

The Indonesian rupiah and the Thai baht both finished Asian
dealing down compared with levels seen Friday, as dollar-buying
by local corporations in Bangkok and Jakarta dominated trade.

Dollar-buying also weighed on the Philippine peso, while the
sharpness of the Singapore dollar's decline led dealers to
believe that the Monetary Authority of Singapore was intervening
against the local currency.

The South Korean won, however, held its own, strengthening
against the U.S. dollar as the country's strong economic
performance continued to attract heavy inflows of foreign
investment funds into the Seoul stock market.

The New Taiwan dollar also edged higher.

The Bank of Japan's action Monday to support the dollar and
arrest the yen's appreciation sparked an early round of dollar-
buying against the Southeast Asian currencies.

Heavy bids were seen from customers in Bangkok and Jakarta as
regional corporations hastened to acquire dollars lest the U.S.
currency appreciate further before their debt service obligations
fall due at the end of the month.

Fearing a liquidity crunch ahead of the New Year, customers
also bought dollars to meet December's debt payments,
exaggerating the decline in the regional currencies, traders
said.

"Local corporations are buying in a last ditch attempt to get
dollars before the month's end," said a dealer at one U.S. bank
in Singapore. "And they are buying for December too. Demand is
extra big this month."

Toward the end of Asian trading hours the dollar had been
pushed higher to trade against the baht at 39.0350 baht, up
steeply from 38.7650 baht late on Friday.

Against the rupiah the U.S. currency had risen to Rp 7,320, up
from Rp 7,200 Friday as fears of trouble in the restive provinces
of Aceh and Irian Jaya further fueled demand.

Against the Philippine peso, the dollar rose to close at
40.935 pesos, up from 40.835 pesos at the end of Friday's
session, despite a rise in government debt yields at the weekly
auction.

The weight of bids to buy the U.S, dollar against the
Singapore dollar forced some market participants to conclude that
the Monetary Authority of Singapore was covertly intervening in
the market, acting through local and locally-active foreign banks
to push the Singapore currency lower.

Dealers suggested that the MAS was keen to emphasize its grip
on the local currency's exchange rate after it relaxed Friday a
number of restrictions governing foreign banks' access to the
fledgling Singapore dollar debt market.

Late in Asian trading Monday, the U.S. dollar was being quoted
at S$1.6765, up from S$1.6710 Friday. So heavy was the buying
Monday that one dealer at a Japanese bank in Singapore suggested
the U.S. dollar was likely to be pushed to a six-week high above
S$1.6800 in the near term.

The South Korean won strengthened as Korean asset markets
continued to attract heavy fund inflows of around $50 million a
day from foreign investors.

Won bulls were further encouraged by comments made over the
weekend by the country's trade minister, Han Duck-soo, who said
the won's strength hasn't damaged South Korean export
competitiveness.

Some observers interpreted the remark as a sign that Seoul's
hard line on won appreciation may be softening.

At Monday's close the dollar was quoted against the won at
1,159.00 won, down from Friday's close of 1,160.20 won.

The New Taiwan dollar also strengthened Monday in heavy
trading. Intraday dealing saw the U.S. dollar sold as low as
NT$31.693, its lowest level in two years, before it recovered
slightly to end the session at NT$31.700, down a fraction from
NT$31.724 Friday.