Asian currencies range-bound, won inches up on yen rise

Asian currencies range-bound, won inches up on yen rise

HONG KONG (Dow Jones): Most Asian currencies remained tightly
range-bound in thin trading conditions through local hours
Tuesday.

Only the South Korean won moved appreciably, strengthening
against the dollar, despite a drop in the Seoul stock market as a
rise in the Japanese yen spurred market players to cover short
positions in the South Korean currency.

But the won's run-up proved limited, as the state-run Korea
Development Bank stepped into the market to support the dollar
above 1,118 won on behalf of a government anxious to suppress
exchange rate volatility.

At the close of local trading in Seoul, the U.S. currency was
quoted against the won at 1,118.50 won, down from 1,120.40 won
the previous day.

The Indonesian rupiah lost ground, largely in response to
commercial selling.

According to the head of trading at one bank in Jakarta, local
units of Japanese corporations have demand to buy around $150
million against the rupiah over the next couple of weeks, as they
repatriate funds ahead of the end of Japan's fiscal year March
31.

Because of the rupiah's illiquidity, their demand is having a
significant impact on the spot exchange rate.

Over recent weeks, interest in the market has dwindled to such
an extent that rupiah interest rates implied by currency swap
rates have been able to fall to a discount to dollar rates
without triggering a large scale speculative sell-off in the
Indonesian currency.

Late Tuesday the dollar was at Rp 7,445, up from Rp 7,405 the
previous day. Dealers expect resistance at Rp 7,500 to hold firm
in the near term.

Intervention by the Taiwan authorities ensured the New Taiwan
dollar remained stable despite lingering nervousness ahead of
Saturday's presidential election.

Downward pressure on the currency eased compared with Monday,
after Taiwan's government directed state-run investment funds to
support the Taipei stock market, which suffered a 6.6 percent
sell-off Monday in response to pre-election jitters.

Rates on short-term U.S. dollar/New Taiwan dollar non-
deliverable forwards remained at a discount in the offshore
market, indicating the market anticipates little chance of a
sell-off in the Taiwan currency either ahead of or immediately
following the weekend's elections.

At the close of domestic trading, the U.S. dollar was quoted
against the New Taiwan dollar at NT$30.738, little changed from
NT$30.741 at the end of Monday's session.

The baht barely stirred as the majority of market players
remained on the sidelines in advance of a benchmark court ruling
expected Wednesday in the Thai Petrochemical Industry case.

TPI's creditors, who are owed $3.5 billion, are seeking to
have the company declared insolvent in an attempt to recover
their loans. The company's management has opposed the move.

With the majority of market participants now anticipating TPI
will be declared insolvent, a decision in favor of the creditors
could have little significant positive impact on the baht in the
short term, said a senior trader at a Thai bank.

But if the court rules against the creditor banks, the
negative effect on investor sentiment could spark a baht sell-
off, which could drive the dollar as high as 38.500 baht, he
warned.

Late in Asia the dollar was quoted at 37.875 baht compared
with 37.825 baht the day before.

The Singapore dollar ended local trading a touch weaker, as
the market continued to talk of heavy outflows related to foreign
investment by Singapore corporations.

Late in Asia, the U.S. dollar was at S$1.7071, up from
S$1.7046 the day before.

On the Philippine Dealing System, the peso closed lower, with
the dollar ending at Rp 40.935, up from Rp 40.865 at Monday's
close.