Asian monies boosted by Zhu's statement

Asian monies boosted by Zhu's statement

SINGAPORE (Dow Jones): Southeast Asian currencies snapped back
from Monday's lows in Asian trading on Tuesday, regaining most of
the previous day's losses after Chinese Premier Zhu Rongji
quashed market fears China was about to devalue its currency.

Having sold down the regional currencies on Monday in response
to a Chinese newspaper article which appeared to favor
devaluation, traders rushed to buy them back early on Tuesday
after Zhu reiterated his government's commitment to a stable yuan
policy.

In Southeast Asia the Singapore dollar and the Indonesian
rupiah both ended local trading hours well up from the near four-
month lows they hit on Monday. The Thai baht and the Philippine
peso benefited too, also ending the day considerably stronger.

In North Asia both the South Korean won and the New Taiwan
dollar recovered from levels seen on Monday, although the
sluggish nature of the won's rise led some market participants to
suspect the Bank of Korea was buying U.S. dollars to hold down
the local currency.

Among Southeast Asian currencies, the baht, the Philippine
peso and the rupiah all picked up strongly.

Against the baht, the U.S. dollar sank back to 36.6800 baht,
from 36.9250 late in Asia on Monday.

On the Philippine Dealing System, the U.S. currency slipped
against the peso, ending at 38.47 pesos, compared with 38.78 at
Monday's close.

Against the rupiah the U.S. dollar eased to end Asian
interbank dealing at Rp 9,100, down from Rp 9,300 a day earlier.

Late in Asian trading on Tuesday, the U.S. currency was quoted
at S$1.6830, down from S$1.6880 late the previous day.

And selling the Singapore dollar short against other regional
currencies could be risky too, Wee argued.

Although many traders believe that the Korean won should
strengthen while the Singapore dollar weakens, the won has proved
disappointingly heavy in the foreign exchange market recently.

Although the Korean currency did rise on Tuesday, traders said
its reaction to Standard & Poor's upgrade of South Korea's
sovereign ratings on Monday was surprisingly muted.

After falling to a low of 1,171.5 won at the open, the U.S.
dollar later regained most of its early losses to finish domestic
trading at 1,176 won, down only slightly from Monday's closing
level of 1,180.

Also in North Asia, the New Taiwan dollar finished the day
higher, after hitting a six-week low in intraday trading on
Monday. At the close of local trading in Taipei on Tuesday, the
U.S, dollar was quoted at NT$32.295, down from NT$32.349 the day
before.

Although the fears that a devaluation of the yuan may trigger
a fresh round of depreciation among the regional currencies have
abated for the time being, at least one analyst warned that the
market should not breathe too easily.

The rumors of a Chinese devaluation were originally sparked by
Brazil's real crisis, and that story, warned the Japanese bank
analyst, who requested anonymity, is far from over.

"The key thing here is how investor confidence and bank credit
lines have been affected. And following Brazil, investor
confidence is very jittery," he warned.

Asian regional currencies are currently being supported by
large current account surpluses, he acknowledged. But over the
next few months those will shrink as collapsed import levels pick
up. Unless foreign inward investment recovers to take up some of
the slack, Asian currencies will once again weaken, he cautioned.