Asian monies fall again against dollar as baht extends losses

Asian monies fall again against dollar as baht extends losses

HONG KONG (Dow Jones): Asian currencies weakened further against the dollar Wednesday as regional markets disregarded the rebound of the Japanese yen.

The Thai baht set yet another 12-month low in afternoon trading, while heavy sales hammered the Singapore dollar to its lowest level in three months. The Philippine peso also softened.

In contrast, the rupiah remained relatively stable, but only because the currency remains firmly sidelined by the majority of market participants.

The Korean won closed lower, but the Taiwanese central bank ensured the New Taiwan dollar stayed rock-steady when trading resumed following Tuesday's earthquake. Offshore, the lack of volatility in the domestic market discouraged the speculative interest some dealers had feared.

Thailand's deputy finance minister, Pisit Leeatam, blamed the baht's continued slide on investor concerns over violence in East Timor and opposition calls for an early general election in Thailand.

Offshore traders, however, attributed the baht's descent to heavy demand for foreign currencies as Thai corporations struggle to meet quarterly debt service obligations.

The appreciation of Japanese currency over the past two months is proving especially painful for Thai borrowers, said analysts, significantly bumping up the baht costs of servicing yen- denominated debt.

Demand for dollars drove the U.S. currency to a high of 40.4400 baht in early afternoon dealing before the dollar settled back to 40.3650 baht late in Asian trading. Late the previous day, the U.S. currency was quoted at 40.1550 baht.

The Singapore dollar also took a hammering Wednesday, as funds' demand for U.S. dollars triggered successive stop-loss orders, driving the U.S. currency to an intraday high of S$1.7095 in afternoon trading, its highest level since late June.

According to dealers, a number of offshore investment funds had previously sold the U.S. dollar short against the Singapore currency on the expectation the yen's appreciation would be mirrored by a rise in the Singapore dollar.

Caught short by the U.S. dollar's firmness against regional currencies in general, the funds moved to cover their positions against the Singapore dollar, pushing the U.S. dollar up steeply.

Late in Asian trading, the U.S. currency had eased off its earlier high to trade at S$1.7076, up from S$1.7002 toward the end of local dealing hours the day before.

Most traders see the U.S. currency testing higher still in the near future, after Singapore's trade minister said that a weaker currency is "helpful for exporters."

The Philippine peso, too, closed lower, with the U.S. currency rising to end at 40.330 pesos, up from 40.150 pesos the previous day, despite a more positive assessment of the Philippines' economic outlook from the IMF.

Although the rupiah remained relatively stable Wednesday, sentiment toward the currency deteriorated after Indonesian police said they would not treat an independent consultant's report into the "Baligate" scandal as evidence, calling the report "illogical."

"This is incredibly rupiah-bearish, as it means there will be no face-saving way for the IMF or the World Bank to resume lending" to Indonesia, wrote Bank of America analysts in a research note issued Wednesday afternoon.

"The only reason the rupiah doesn't fall further is that most players are already long dollars, so the rupiah is not moving," the BoA note added.

Late in Asian dealing the U.S. dollar was quoted against the rupiah at Rp 8,370, little changed from Rp 8,360 late the day before.

Expectations that the Taiwanese central bank would step into the market to flatten any volatility kept the New Taiwan dollar tightly range-bound when trading resumed following Tuesday's earthquake.

In the domestic spot market, the U.S. dollar ended flat compared with Monday's close at NT$31.796.

Interest in the offshore market in non-deliverable forwards was limited, according to brokers in Singapore and Hong Kong, with forward premiums ending flat compared with Monday's levels, despite spiking briefly higher earlier.

End of quarter demand for dollars drove the Korean won lower, with the dollar climbing to end the Seoul session at 1,207.60 won, up from 1,204.50 won at Tuesday's close.