Asian monies slip, peso tumbles

Asian monies slip, peso tumbles

SINGAPORE (Dow Jones): Asian currencies slipped late Tuesday as most Southeast Asian units continued to languish below key support levels.

The Philippine peso suffered the biggest blow as it extended its downward spiral to a fresh 33-month low, while the Thai baht's decline was cushioned by profit-taking in the dollar, dealers said.

The slump in the Southeast Asian foreign exchange market thrust the Singapore dollar out of its recent trading band and sent it sliding past the S$1.7250 support level against the U.S. currency.

The Philippine peso cracked below 45.45 pesos support to the dollar, paving the way for a further decline to an intraday low of 45.60 pesos, its worst performance since Jan. 7, 1998, when it hit a record low of 46.50 pesos.

The dollar closed at 45.595 pesos on the Philippine Dealing System, up from Monday's close at 45.30 pesos.

Currency watchers said the dollar is poised to march higher to 46 pesos in coming weeks.

The baht's decline, strong local corporate demand for dollars, weak inflows of the U.S. currency into the country and hedging activity via the non-deliverable forward market contributed to the peso's slide, dealers said.

Concerns that the Philippine government will badly overshoot its budget deficit target for this year, a protracted insurgency in the south, and waning confidence in President Joseph Estrada's administration amid renewed concerns over cronyism, continued to loom in the background.

The yen's retreat, following its recent gains, contributed to the gloomy sentiment toward other Asian currencies, dealers said.

Around 0936 GMT, the dollar was at Y106.35, up from Y105.80 late Monday in Tokyo, on renewed rumors of a downgrade of Japan's ratings by Moody's Investor's Service Inc.

In the Thai currency market, the dollar extended Monday's gains, rising to around 41.22 baht at 0915 GMT.

Offshore demand for the U.S. currency, panic-buying of dollars by onshore corporates to meet heavy external debt repayments this month and dollar-purchases by Japanese participants for their half-year book-closing, pressured the baht, dealers said. But these factors failed to push the dollar above 41.30 baht, where dollar-selling by exporters and offshore players emerged.

The baht brushed off the central bank's decision to maintain its forecast that core inflation will remain within the target range of 0 percent to 3.5 percent until the second quarter of 2002, in the absence of significant inflationary threat from escalating oil prices or the weakening baht.

Against the Singapore dollar, the U.S. dollar muscled its way through S$1.7250 resistance and headed toward its next upside target of S$1.7280 in late trading.

Market participants were, however, wary of aggressively pushing the Singapore dollar lower amid fears of intervention by the Monetary Authority of Singapore, which had recently indicated its preference for a slightly stronger local currency vis-a-vis the currencies of its major trading partners.

The U.S. dollar was at S$1.7278, up from S$1.7217 late Monday.

In the Indonesian currency market, the dollar edged up to Rp 8,327, up from Rp 8,300 late Monday in thin trading.

Elsewhere, heavy net selling by foreign investors in the Seoul stock market led to a retreat in the South Korean won, which had closed at 33-month highs over the past two trading days, dealers said.

The dollar finished at 1,105.30 won, up from Monday's closing level at 1,104.40 won.

Against the New Taiwan dollar, the U.S. currency finished higher at NT$31.075, up from Monday's close at NT$31.063.