Asian monies mixed as yen takes a breather

Netty Ismail, Dow Jones, Singapore

Asian currencies were mixed late Thursday after clambering off their intraday lows, as expressions of concern by Japanese monetary officials over the speed of the yen's recent decline provided the beleaguered Japanese unit with some breathing space.

The yen's slide to as low as 133.24 yen to the dollar early Thursday had cast a shadow on the other regional currencies.

The currencies, however, regained their footing when the yen recovered on comments by a senior official at Japan's Ministry of Finance, Zembei Mizoguchi, and subsequently Finance Minister Masajuro Shiokawa, expressing concerns over the pace of the yen's recent declines to three-year lows.

Their comments came at a time when Prime Minister Junichiro Koizumi is on the second day of his five-nation tour of Southeast Asia - during which he risks being bombarded with complaints over Japan's weak yen policy.

Unlike some of their North Asian counterparts, Southeast Asian officials have remained silent despite worries that further pressures on their currencies from a slumping yen could push up the costs of servicing the region's dollar-denominated debts and dampen their economies' recovery prospects.

The dollar has bounced off the psychologically important 132 yen level to trade around 132.40 yen at 0910 GMT (4.00 pm Jakarta time), lower than 132.65 yen late Wednesday in New York.

"Dollar/yen's failure to break 132 yen is a good sign," said a dealer at a European bank. "For all you know, dollar/regional will trend back up again."

Indeed, the dollar remained buoyed above the psychologically important levels against Asian currencies, as participants took advantage of the U.S. unit's pullback to add on to their long U.S. dollar positions.

Against the Singapore dollar, the U.S. currency stayed above S$1.8400, and was quoted at S$1.8436 late in the day, compared with S$1.8467 late Wednesday.

"The Singapore dollar has been the most correlated with the yen's movements," said Mansoor Mohi-uddin, a regional currency strategist at UBS Warburg. "But it's beginning to show signs of outperforming."

He added that the Monetary Authority of Singapore's recent move to reinstate a narrower policy band within which it guides the trade-weighted local dollar indicates that the central bank may be less tolerant of the Singapore dollar's weakness against the U.S. currency.

The Philippine peso in part received a boost from investors' overwhelming response to the government's 15-year global bond issue, which was increased to US$750 million from $500 million, dealers said.

"With the fresh borrowing, the government needs to raise less than $400 million to complete a $1.4 billion foreign financing requirement for 2002," which is needed to help it finance an estimated 130 billion-peso budget deficit this year, BNP Paribas said in a report.

Expectations of foreign investment inflows from the sale of shares in food conglomerate San Miguel Corp. to Japan's Kirin Brewery Ltd. also bolstered the peso, dealers said.

The peso also found support from remittance inflows from Filipinos working overseas and the central bank's decision to leave overnight rates unchanged.

The dollar closed at 51.325 pesos on the Philippine Dealing System, down from 51.560 pesos Wednesday. Volume almost doubled to $125.2 million from $69.7 million Wednesday.

After floundering to as low as 1,318.0 won to the dollar in early trade, the South Korean currency ended at 1,312.3 won, only marginally lower than Wednesday's close of 1,311.9 won.

Bank of Korea Governor Chon Chol-hwan said Thursday that the current level of the yen was "not too worrisome," despite his concern over the direction of the Japanese currency.

He added that the central bank won't intervene in the foreign exchange market unless market volatility increases "excessively."

Against the New Taiwan dollar, the U.S. currency closed at NT$35.025, slightly lower than NT$35.050 Wednesday, in dealings valued at US$584.5 million.

To keep a rein on the appreciation of the local currency - in an apparent bid to maintain the price competitiveness of Taiwan's exports - the central bank snapped up more than US$100 million throughout the session, dealers in Taipei said.

The Thai currency was slightly weaker at 44.100 baht to the dollar, compared with 44.065 bath late Wednesday.

The Indonesian currency was unchanged from late Wednesday's level of around Rp 10,430 to the dollar.