Asian monies mixed as yen takes a breather

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.