Asian currencies up late on yen

Asian currencies up late on yen

Dow Jones, Singapore

Most Asian currencies basked in the glow of the yen's bounce and Wall Street-inspired gains in the region's stock markets, dealers said.

The yen found support from talk of Japanese investors repatriating offshore assets before the end of the fiscal year on March 31 and hopes that the Japanese government is about to unveil a package of anti-deflationary measures to coincide with U.S. President George W. Bush's visit this weekend.

At 0927 GMT (4.27 p.m. Jakarta time), the dollar was quoted at 132.68 yen, below 133.38 yen late Wednesday in New York.

"The longer dollar/yen stays in this range - 131.50 yen to 135 yen - the more scope there is for Asian currencies to strengthen," said a dealer at a European bank.

Asian currencies have been outperforming the yen, given their divergent economic prospects. While the region is well-positioned to benefit from a U.S. economic recovery, Japan is sinking deeper into an economic quagmire.

Repatriation flows could further push the yen toward the 130 yen mark, said Cohen David Cohen, an economist at Standard & Poor's MMS International. But as these flows ebb, the Japanese currency will likely retreat to 140-145 yen to the dollar within the next six-to-eight months, he added.

"The Japanese economy is lagging the rest of the industrialized countries and the rest of the region," Cohen said. "We'll see further pressure on the yen as we go forward."

The South Korean won led the rise in the region, as foreign investors snapped up 275.9 billion won of local shares, propelling the benchmark stock index by 7.6 percent.

On the first trading day after the Lunar New Year holidays, the dollar closed at 1,316.2 won, down from last Friday's close of 1,320.2 won.

The Thai currency advanced to 11-month highs as the firmer yen and capital inflows prompted participants in Bangkok to sell dollars, dealers said.

Late in the day, the dollar was at 43.630 baht, lower than 43.785 baht late Wednesday.

Dealers said there was no evidence the Thai central bank was present in the market to curb the baht's strength, although some banks in Bangkok were buying dollars at lower levels. Dealers believe the Bank of Thailand recently bought dollars in the market to accumulate foreign reserves.

The Philippine peso derived its strength from its regional peers, a 1.4 percent rise in the local stock market, as well as dollar sales by exporters, dealers said.

Earlier, talk that the Philippine central bank might cut its key interest rates by as much as 50 basis points had made participants uneasy, pressuring the peso, some dealers said.

But participants were relieved when the central bank decided to cut its key interest rates by 25 basis points - bringing rates to their lowest level in six-and-a-half years. The rate cut is expected to boost the economy, with higher bank lending and demand for credit from companies and consumers.

Effective Friday, the headline overnight borrowing rate in a tiered system is 7.25 percent.

On the Philippine Dealing System, the dollar closed at 51.295 pesos, lower than 51.350 pesos Wednesday.

After having been trapped in a tight band all day, the Singapore dollar was stronger at S$1.8247 against its U.S. counterpart compared with S$1.8330 late Monday, before the Lunar New Year holidays.

Bucking the trend, the Indonesian rupiah was weaker as participants rushed to cover their short-dollar positions, dealers said.

The dollar was quoted at Rp 10,240 late in the day, higher than Rp 10,180 late Wednesday.

Taiwan's foreign exchange market remained closed for the Lunar New Year holidays, and will re-open Friday. The stock market will, however, remain shut.