Asian currencies up, dollar at year low

Asian currencies up, dollar at year low

Alan Yonan Jr., Dow Jones, Singapore

The dollar's retreat against Asian currencies continued unabated Monday, with the dollar falling to its lowest level in more than a year against the Philippine peso and Thai baht.

The dollar did manage to maintain an even keel against the Japanese yen, but dealers said that was largely because markets in both Tokyo and London were closed for holidays.

The dollar is expected to resume its defensive position against the yen and euro when full-scale trading resumes Tuesday.

The global view toward the dollar remains decidedly bearish, analysts say, as evidence mounts that foreign investors are losing their taste for U.S. corporate bonds and equities.

In Asia, the dollar fell through the critical 50-peso level early in the session, triggering stop losses that pulled it down to 49.775 pesos at the close.

It was the dollar's weakest performance against the peso since April 2001.

With demand for the U.S. currency weak, the peso got a bigger than normal boost from seasonal inflows. Remittances have been rising ahead of the new school year as Filipinos working overseas send money home to help pay for tuition.

Market players also felt more comfortable pushing the dollar lower after Central Bank Governor Rafael Buenaventura commented that the peso's strength wasn't detrimental to the country's export competitiveness.

Buenaventura did caution that the central bank is monitoring the market for any speculative activity and excessive shorting of the dollar.

However, late Monday, Buenaventura said the dollar may pull back to 50 peso in the near-term on a possible change in the market's bearish sentiment against the U.S. currency.

Despite markets in Bangkok being closed for a holiday, offshore demand for the baht lifted the currency to its best finish against the dollar in 14 months.

A dealer at a European bank in Singapore said there didn't appear to be any particular reason for the interest in the baht, other than the general dollar weakness in the region.

"The peso's strong showing probably provided some support," the dealer said. However, the baht's gains were likely somewhat exaggerated due to thin market conditions, he added.

Late in Asia the dollar was quoted at 42.950 bath, down from 43.070 bath late Friday. It was the dollar's poorest showing against the baht since February 2001.

Dollar selling led by South Korean exporters helped push the won to a four-month high against its U.S. counterpart.

The dollar ended at 1,281.2 won, down from Friday's close of 1,284.0 won.

The dollar traded as low as 1,278.2 won early in the session, but recovered somewhat as foreigners sold a net 166 billion won of shares in the local stock market.

Exporters in Taiwan also jumped into the market to unload U.S. dollars, pushing the local currency to a 20-week high.

The U.S. dollar closed at NT$34.565, down from NT$34.592 Friday.

The U.S. dollar's fall was cushioned by Taiwan's central bank's purchases, which accounted for around half of Monday's volume, a dealer said. The U.S. currency's fall was also partially offset as interbank traders covered their short U.S. dollar positions in the wake of a 4.5 percent decline in the Taiwan Stock Exchange's main index.

The Singapore dollar followed other regional currencies higher with a lack of fresh leads on which to trade.

Near the end of Asian trading, the U.S. dollar was quoted at S$1.8047, down from S$1.8075 late Friday.

Against the Indonesian rupiah, the dollar was quoted at Rp 9,285, down from Rp 9,310 late Friday.

Analysts say the rupiah's performance in the weeks ahead will depend on whether Indonesia can sell nationalized PT Bank Niaga, which the IMF highlighted as a major near-term policy goal to help restore the financial sector to health after the 1997 Asian crisis.