Asian monies fall as dollar rallies against yen

Asian monies fall as dollar rallies against yen

SINGAPORE (Dow Jones): A bout of position covering pushed Southeast Asian currencies lower against the U.S. dollar during Asian trading hours on Monday.

After renewed buying propelled the U.S. dollar above 119 yen in New York on Friday, dollar buying from market players caught short the U.S. currency against Asian regional currencies forced the Singapore dollar and the Thai baht lower in Asian trading. In North Asia, the new Taiwan dollar and the South Korean won also fell.

In late trading in Tokyo, the dollar was trading at 119.35-38 yen, up from 119 yen in New York late Friday and 117.99-118.02 yen here Friday afternoon.

The greenback was quoted at 119.57-59 yen three hours earlier.It moved between 119.08 yen and 119.69 yen during the day.

The Philippine peso, however, recovered from its early lows to finish higher on the day, while the rupiah traded sideways ahead of Tuesday's meeting in Jakarta of the People's Consultative Committee, Indonesia's highest legislative body.

Even if the U.S. dollar had not strengthened against the yen, Asian regional currencies would have been likely to weaken, according to many traders and analysts. Following recent rallies, Asian currencies are over-valued and overdue for a correction, they argue.

"The market is very short of dollars," said the head of foreign exchange at one Japanese bank in Singapore. "In this environment Asian currencies could weaken even if there is a setback for the dollar against the yen."

Highest

As interbank trading in Singapore was drawing to a close the U.S. dollar had risen to an intraday high of S$1.6475, its highest level in a month and well above S$1.6286 late in Asia on Friday.

U.S. dollar purchases by importers were instrumental in pushing the baht lower in Asian trading on Monday.

The baht will continue to find support from inflows into the market of foreign investors' funds, said Chia Woon Khien, regional treasury economist at Skandinaviska Enskilda Banken in Singapore, at least in the medium term.

Late in Asian trading on Monday, the U.S. dollar was quoted at 36.66 baht, up from 36.91 baht late on Friday.

The Philippine peso also started trading on Monday on a weak note, but recovered from its early intraday lows as overseas demand for the local currency picked up.

At the close of trading on the Philippine Dealing System, the U.S. dollar was quoted at 39.83 pesos, down from 39.96 pesos at the close of trading on Friday.

Late in Asian dealing on Monday, the U.S. dollar was quoted at Rp 8,500, a touch above Rp 8,374 at the same time on Friday.

In North Asia, both the new Taiwan dollar and the won fell back in response to the U.S. dollar's rise against the yen.

At the close of domestic trading in Taipei, the U.S. dollar was quoted at NT$32.647, up from NT$32.558 at Friday's close.

In Seoul the U.S. dollar ended at KRW1,315, up from KRW1,312 on Friday.