Asian currencies recoup losses

Asian currencies recoup losses

Dow Jones, Singapore

Asian currencies recouped some of their recent losses Thursday as a short-covering rally in the dollar wound down.

The South Korean won led the way, powering to an 18-month high against the dollar. The Singapore dollar, New Taiwan dollar, Thai baht and Philippine peso strengthened modestly.

The U.S. dollar, which has been in a global downtrend since March, managed to rebound during the previous three sessions as market participants squared their short positions in the U.S. currency.

However, with most of the positioning out of the way, Asian currencies were free to resume their climb, analysts said.

Rising stock prices in all markets except for Tokyo and Manila also bolstered regional currencies.

Foreign exchange trading was generally light because players were reluctant to take large positions ahead of the market- closing holiday in the U.S., dealers said. The chance of a terrorist attack against the U.S. added to the sense of caution, they said.

If the holiday passes without any major incidents, there could be a potential relief rally for both the dollar and U.S. stocks, said Jimmy Koh, head of Treasury research at UOB Group in Singapore.

Even so, the dollar is likely to be sold on rallies as long as investor skepticism toward U.S. stocks and Corporate America in general persists, Koh added.

Against the won, the dollar closed at 1,200.5 won, down from 1,207.8 won Wednesday. It was the dollar's lowest close against the South Korean currency since December 2000.

The dollar's fall to an intraday low of 1,198.6 won triggered a response from the Ministry of Finance and Economy, which issued a statement saying it would take the necessary steps to stabilize the exchange rate.

Though it couldn't be confirmed, the Bank of Korea was said to have bought dollars through state-run banks in a bid to push the closing rate back over 1,200 won.

The New Taiwan dollar took its cues from the strengthening stock market, not the faltering yen.

The U.S. dollar closed at NT$33.574, compared with NT$33.595 Wednesday.

The weighted price index of the Taiwan Stock Exchange closed up 1.6 percent, helped by overnight gains on Wall Street.

The New Taiwan dollar often, but not always, moves in the same direction of the yen because the two countries compete in many of the same export markets.

Against the Singapore dollar, the U.S. dollar was quoted at S$1.7695 in late Asian trade, down from S$1.7715 late Wednesday.

The currency pair traded in a narrow S$1.7680 to S$1.7705 range.

"The volume was extremely thin and there was negligible trading interest today because of the U.S. holiday," an Asian bank dealer said.

The recent run-up in the dollar prompted some players to sell the currency against the peso and lock in the profits.

The dollar closed at its intraday low of 50.550 pesos on the Philippine Dealing System, down from 50.740 pesos Wednesday.

The peso also benefited from an easing of investor concerns regarding the Philippines' widening budget deficit. Central bank Governor Rafael Buenaventura said Thursday that the market had overreacted to news on budget deficit, adding that the dollar is more fairly valued at around 50 pesos.

The budget deficit in January to May totaled 107.5 billion pesos, accounting for over 80 percent of its target for the entire year. But the government said it's sticking to its fiscal program.

The rupiah got a lift from a rebound in local stocks and rumored intervention by the Indonesian central bank.

Near the end of Asian trading the dollar was quoted at Rp 8,860, down from Rp 8,965 Wednesday.

Indonesian shares rose 2.1 percent Thursday after falling by more than 5 percent over the previous four sessions.

Continuing signals from Thai authorities that they won't stand in the way of a stronger baht as long as it is appreciating along with other Asian currencies gave players the green light buy the local currency.

Late in Asia the dollar was quoted at 41.580 baht, down from 41.605 baht late Wednesday.

"The Bank of Thailand seems willing to tolerate a certain currency strength," said Mansoor Mohi-uddin, currency strategist at UBS Warburg in London. "If the dollar continues to weaken versus the Japanese yen, as expected, investors are looking for the baht to continue to strengthen," he said.