Asian monies up, won at record high

Asian monies up, won at record high

Dow Jones, Singapore

Asian currencies kicked off the week on a stronger note on renewed U.S. dollar weakness on Monday, but gains were tempered by concerns of central bank intervention.

Central banks are reluctant to let their currencies appreciate too much for fear of eroding export competitiveness in an uncertain global environment.

The dollar weakness came after weak University of Michigan consumer confidence figures on Friday raised doubts about the strength of the U.S. economy going forward.

Monday's broad trend is likely to continue for the rest of the week as the dollar softens ahead of an expected U.S. interest rate cut next week, and as Asian stock markets continue to put up a strong showing, Bank of America said.

Also, renewed expectations that China will revalue the yuan "could arouse speculation that such a revaluation could be the decisive factor in making Asian central banks more permissive of local currency appreciation," the bank said.

Talk of a yuan revaluation has revived in recent days - sparked off by research reports and also China's rising foreign exchange reserves - but hasn't been priced in by Asian currency markets, analysts said.

China's pegged currency regime, which gives it an advantage in the export market at a time when the dollar is weak, "remains an influence on policy" in the region, said David Simmonds, senior emerging markets strategist for Asia at Royal Bank of Scotland.

The South Korean won came off its intraday peak on suspected dollar buying by the government, but still finished at a three- and-a-half month high.

The dollar closed at 1,190.3 won, down from 1,191.9 won on Friday.

The dollar briefly drifted below support at 1,190 won early in the session, but then pulled back on buying by state-run banks, believed to be on behalf of the government, market players said.

"I think the authorities didn't buy a lot. It was just enough to give a signal to the market," said a Seoul-based trader.

Anticipation of further such intervention prevented investors from selling dollars aggressively most of the day, but near the end of trading, won buying by foreign funds to settle recent share purchases pressured the dollar to near 1,190 won, dealers said.

The U.S. unit's weakness, coupled with foreign buying of local shares, drove the New Taiwan dollar to its strongest close in over three months, dealers said.

Overseas investors were net buyers of NT$1.32 billion in local shares on Monday, according to the Taiwan Stock Exchange.

The U.S. dollar ended at NT$34.599, down from NT$34.645 Friday.

The Philippine peso was buoyed by foreign fund inflows to the local stock market, remittances built up over the long weekend, and also a lower-than-targeted budget deficit last month, traders said.

The dollar finished at an intraday low of 53.40 pesos on the Philippine Dealing System, down from 53.61 pesos on Thursday. Philippine markets were closed for a holiday on Friday.

The government said after the market close on Thursday that its deficit in May stood at 13.4 billion pesos, below its 20- billion pesos ceiling. The government also had a lower-than- target deficit in April.

The Indonesian rupiah was also boosted by continued capital inflows from offshore, attracted by high yielding local assets, dealers said.

The dollar closed local trading at 8,205 rupiah, down from Rp 8,230 on Friday.

A slew of local companies are currently offering bonds, with coupons of between 12.75 percent and 14.25 percent, among the highest yields in the region.

Dealers said speculators are also betting that an impending initial public offering of shares in state-owned Bank Mandiri will attract foreign investor interest.

The Thai baht was up on broad U.S. dollar weakness. News of faster-than-expected economic growth in the first quarter didn't create any waves in the market as the data was as expected.

The dollar closed the local session at 41.56 baht, down from 41.60 baht on Friday.