Asian currencies up late, led by Singapore dollar

Asian currencies up late, led by Singapore dollar

SINGAPORE (Dow Jones): Asian currencies were firmer Thursday,
with the Singapore dollar racing up to a three-week high,
following remarks by the de facto central bank suggesting the
Singapore dollar may be allowed to appreciate.

Other Southeast Asian currencies found some reprieve from the
Singapore dollar's strong gains and as players unwound their long
U.S. dollar positions, currency watchers said.

Analysts, however, warned that the respite Thursday doesn't
herald a recovery for most of Southeast Asia's beleaguered
currencies, especially the Thai baht, as political and economic
anxieties in some of these countries prevail.

Elsewhere, a reported intervention by Taiwan's central bank
helped buoy the New Taiwan dollar, while month-end dollar selling
by South Korean exporters lifted the won.

Remarks that the Monetary Authority of Singapore is prepared
to allow a modest appreciation of the Singapore dollar in
relation to the currencies of its major trading partners pulled
the U.S. dollar below the S$1.7400 psychological support, dealers
said.

Although inflation remains benign for the time being, the MAS
is concerned by signs that it may rise in the future, Managing
Director Koh Yong Guan said.

The market interpreted his comments to mean that the MAS
probably finds the Singapore dollar undervalued, prompting them
to unload their U.S. dollar positions.

Despite the MAS's suspected moves recently to defend Singapore
dollar, market participants were nonetheless caught off guard,
dealers said.

Around 0800 GMT, the U.S. dollar was at S$1.7350, its lowest
level in three weeks. The U.S. currency was quoted around $1.7428
late Wednesday.

Strong corporate U.S. dollar-demand around S$1.7300 and the
vulnerability of its Southeast Asian counterparts will, however,
limit the Singapore's currency strength in the short term,
dealers said.

After sliding to its lowest level in almost 10 months, the
Thai baht, which became the latest prey this week to Southeast
Asian bears, recovered as investors unwound their long dollar
positions, dealers said.

The dollar retreated below the psychological support level of
41 baht to trade at 40.925 baht around 0840 GMT, down from 41.140
baht late Wednesday.

Analysts said the dollar will likely resume its uptrend to
break 42 baht in coming months, amid political uncertainty ahead
of Thailand general elections, which will likely take place in
the fourth quarter of this year.

"We could see levels of 42 baht to 43 baht over the three-
month horizon," said David Simmonds, a regional currency
strategist at Salomon Smith Barney/Citibank.

"We are unlikely to see any major lurches in policy, but
there's enough uncertainty about who will be in the new coalition
government and who will lead it," he added.

In the rupiah market, reported dollar-selling by Indonesian
state banks and long-liquidation in the U.S. currency boosted the
Indonesian currency to Rp 8,963 against the dollar, compared with
Rp 9,070 late Wednesday.

Sentiment on the rupiah has improved slightly, although
players remained nervous about the political tensions in Jakarta
ahead of the National Assembly, dealers said.

Indonesia's acting central bank governor Anwar Nasution
confirmed Thursday the government will sign letter of intent with
the International Monetary Fund Monday, which would pave the way
for a $400 million disbursement from IMF's loan package to
Indonesia.

In Manila, the dollar was at 44.865 pesos, down from
Wednesday's close of 45.070 pesos.

The New Taiwan dollar closed higher as U.S. dollar-selling by
the central bank countered the downward pressure from Taiwan's
sluggish stock market, dealers said.

The U.S. dollar ended at NT$31.052, down from NT$31.061 late
Wednesday.

The dollar finished at 1,113.40 won, down from Wednesday's
close of 1,115.30 won.