Asian monies soften, U.S. dollar shines

Asian monies soften, U.S. dollar shines

SINGAPORE (Dow Jones): Southeast Asian currencies ended Asian
trading hours on Wednesday a touch softer against the U.S.
dollar, as the market returned to bidding up the U.S. currency
against Asia as a whole.

With the U.S. dollar's luster burnished by Alan Greenspan's
testimony before Congress on Tuesday, in which the Federal
Reserve chairman hinted at a more hawkish stance towards U.S.
monetary policy, traders said that the U.S. currency was once
again appearing attractive relative to Asia's regional
currencies.

In Southeast Asia, renewed U.S. dollar bids pushed the
Singapore dollar to a fresh five-month low, while in North Asia
both the South Korean won and the new Taiwan dollar declined.

The Indonesian rupiah closed slightly higher against the
dollar in quiet dealings Wednesday as state banks and some
offshore participants sold the U.S. currency.

The dollar closed at Rp 8,820 in the spot market for the Asian
session, down a bit from Rp 8,850 Tuesday.

"Although earlier this week the dollar broke Rp 9,000, the
market still perceives the level is a resilient resistance," said
a dealer with a foreign bank. "The central bank faithfully guards
the rupiah at Rp 9,000," the dealer said.

Dealers said that as the dollar loses steam against the rupiah
at Rp 9,000, the rupiah's high yield will become a good reason
for investors to buy the currency.

Although a liquidity squeeze helped the Thai baht claw back
some of its recent losses at the open, not even short-term
funding costs as high as 30 percent proved sufficient to deter
the dollar bulls, and the baht surrendered its early gains later
in the day.

Despite the market's enthusiasm for the U.S. dollar, trading
activity was generally subdued. Of the Asian regional currencies,
only the baht and Singapore dollar attracted appreciable levels
of interest.

At the start of Asian trading a flurry of U.S. dollar sales
pushed the U.S. currency sharply lower against the baht.

Traders attributed the U.S. dollar selling to offshore players
forced to exit their short positions in the Thai currency after
the baht interest rates implied by tomorrow/next day baht swap
rates rose to levels as high as 30 percent late Tuesday.

Despite the high costs of funding short baht positions, the
U.S. dollar found support at its early intraday low of 37.31
baht, and recovered during the session to end Asian hours at
37.5650 baht, up a touch from 37.5150 baht late the previous day.

With short-term Singapore dollar interest rates hovering
around 1 percent, funding costs were no deterrent to market
players seeking to sell the Singapore short.

Heavy U.S. dollar purchases, executed, according to traders,
by U.S. investment houses in Hong Kong, propelled the Singapore
currency to a fresh five-month low in afternoon trading.

Late in Asian trading the U.S. dollar had eased slightly to
trade at S$1.7255, up from S$1.7192 late Tuesday.

Most traders remain bullish on the U.S. currency's short-term
prospects, with a trader at a Singapore bank saying: "The market
may test S$1.7280, but at S$1.7300 there is major resistance."

The U.S. dollar also made gains elsewhere in the region.

Against the Philippine peso, the U.S. currency ended the
trading day at 39.09 pesos, up from 38.99 pesos at Tuesday's
close.

In North Asia, both the new Taiwan dollar and the South Korean
won slipped. In Taipei the U.S. currency ended at NT$33.083, up
from NT$33.028 the day before. In Seoul the U.S. dollar closed at
1,217.50 won, compared with 1,212.50 won on Tuesday.