Asian currencies up late as U.S. dollar loses luster

Asian currencies up late as U.S. dollar loses luster

SINGAPORE (Dow Jones): Asian currencies surged late Friday, as
the U.S. currency continued its broad-based correction, prompting
wrong-footed dollar bulls to further unwind their long positions,
market watchers said.

The dollar has lost its luster amid concerns over a protracted
economic stagnation in the U.S., the bulging U.S. current account
deficit and the debate surrounding Washington's strong dollar
policy. That, in turn, proved unsettling those who have long been
bearish on Asian currencies.

The dollar weakened against all its major counterparts
Thursday, tumbling 2 percent against the yen and 1.5 percent
against the euro.

At 0900 GMT (4 p.m. Jakarta time), the dollar was at Y121.89,
slightly stronger than Y121.65 late Thursday in New York. The
euro was at $0.8952, up marginally from $0.8925 late Thursday.

"It's not Asian currency strength; it's basically dollar
weakness," said Philip Wee, a market strategist at Singapore's
DBS Bank.

Market watchers suspected that monetary authorities in
Singapore, Taiwan and South Korea bought U.S. dollars Friday to
curb the appreciation of their respective currencies.

The Indonesian rupiah ended higher against the dollar as
President Megawati Soekarnoputri's choice of nonpolitical
professionals to her cabinet continued to help sentiment.

Indonesia's central bank also sold dollars in very thin pre-
weekend trade, dealers said. Total intervention amounted to only
about $20 million.

The dollar closed Asian trade at its intraday low of Rp 9,110
rupiah, below Rp 9,125 Thursday.

But the dollar is unlikely to fall below Rp 9,000 next week as
local companies with foreign debt will buy the U.S. unit at these
lower levels, traders said.

The Singapore dollar resumed its recent precipitous rise,
soaring 1.3 percent to a five-month high before retreating
slightly on talk that the monetary authority had bought some
US$150 million to US$250 million via a foreign bank, observers
said.

Earlier, foreign funds had dumped U.S. dollars, triggering
stop-loss sales in the U.S. currency which accelerated its fall,
and sent it reeling to as low as S$1.7540, its weakest level
since March 9, dealers said.

Late in the day, the U.S. dollar was quoted at S$1.7569, much
lower than S$1.7769 late Thursday in offshore trade. Singapore
markets were closed Thursday for the National Day holiday.

The yen's overnight jump boosted the South Korean currency to
as strong as 1,278.5 won against the dollar in early trade,
dealers said.

But the won's advance past the critical 1,280 won mark
provoked state banks - believed to be acting on behalf of the
central bank - to buy dollars, dealers said.

The dollar closed at 1,283.5 won, down from 1,288.4 won
Thursday.

The New Taiwan dollar, too, received a fillip from the yen's
overnight advance, though central bank intervention - it bought
an estimated US$100 million - stymied its ascent, dealers said.

The U.S. dollar closed at NT$34.625, down from NT$34.662
Thursday.

On the Philippine Dealing System, the peso rose to a two-month
closing high, dealers said. Regional currency gains, a two-
percentage point rise in banks' liquidity reserve requirement and
concerns that authorities will increase their vigil over foreign
exchange transactions bolstered the peso.

The dollar closed at 51.850 pesos, lower than 53.000 pesos
Thursday.

The bouyant mood in the region also spilled over into the Thai
currency market, where the baht strengthened to 45.240 baht per
dollar, compared with 45.450 baht late Thursday.