Asian monies mostly lower despite yen rebound

Asian monies mostly lower despite yen rebound

Dow Jones, Singapore

Despite a recovery in the Japanese yen, most Asian currencies
that were open for trade Tuesday posted mild losses against the
U.S. dollar.

Traders said corporate demand for dollars in the Philippines
and Thailand weighed on their currencies, while the Indonesian
unit was unchanged.

Trading volumes across the region were lower than normal as
markets in China, Malaysia, Hong Kong, South Korea, Taiwan and
Singapore were closed for Lunar New Year holidays.

Most markets in the region will remain shut Wednesday.

The yen rose against the dollar, helped by repatriation flows
as Japanese companies sought to improve their balance sheets
ahead of the fiscal year-end book-closing on March 31.

Concerns about credit quality in the U.S. banking sector,
specifically unconfirmed rumors that a major institution might be
downgraded by rating agencies due to its exposure to corporate
failures including Enron, K-Mart and Global Crossing, also dented
sentiment toward dollar-yen.

In the shorter term, the dollar is likely to continue its
correction against the yen, as concerns over developments in
Argentina and the widening Enron scandal in the U.S. cloud the
outlook for the greenback, said Noriyuki Fujita, head of foreign
exchange at Societe Generale in Tokyo.

Late Tuesday, the Japanese government released a study paper
which calls on the government and central to take drastic steps
to clear bad loans from banks' balance sheets and provide
liquidity to financial markets to prevent the economy from
falling into a deflationary spiral.

The government study paper, warning of a vicious circle of
price falls and economic deterioration, was scant on details but
is expected to lay the groundwork for promised steps to combat
deflation. The paper was presented to a meeting of Prime Minister
Junichiro Koizumi's top economic panel, which Economy Minister
Heizo Takenaka said would flesh out anti-deflation measures. That
package, expected out this week, reportedly will include steps to
accelerate bad loan disposals, perhaps including the use of
taxpayers' money to replenish banks' depleted capital.

At 0930 GMT (4.30 p.m. Jakarta time) the dollar was at 133.40
yen, down from 134.45 yen a day earlier.

Recent yen weakness - due in part to a perceived Ministry of
Finance policy to help Japan export its way out of recession -
hurt Asian currencies, preserving some of their exporters' price
competitiveness versus Japan.

The rise in the yen Tuesday, however, failed to lift the peso
and baht as corporate dollar demand remained strong.

The dollar closed at 51.340 pesos on the Philippine Dealing
System, up from 51.315 pesos Monday.

Traders said corporate demand for dollars was strong under
51.400 pesos.

The baht was marginally lower against the U.S. dollar late in
Asian spot trade at 43.93 compared to 43.885 baht a day earlier.

The rupiah was flat against the dollar at 10,200, helped by
suspected dollar sales by agents of the Indonesian Bank
Restructuring Agency, which lifted the local currency from its
session low.