Asian monies weaken against dollar despite rise in yen

Asian monies weaken against dollar despite rise in yen

HONG KONG (Dow Jones): Most Asian currencies weakened against the U.S. dollar during local trading hours Monday, even though the U.S. currency itself fell against the Japanese yen.

The Singapore dollar was the only regional currency to benefit from the yen's strength. Others, including the Philippine peso, the Thai baht, the New Taiwan dollar and the Korean won, all ended the day lower.

Dealers in Singapore took heart from the rise of the yen to bid up the local currency, assuming that, with the yen strong, the Monetary Authority of Singapore would be less inclined to intervene to hold the Singapore dollar down against the U.S. currency.

Last week, according to traders, the MAS bought U.S. dollars at S$1.6780 to maintain the local currency's neutrality against the trade-weighted basket of currencies it tracks.

Monday, however, as the U.S. dollar dropped to a fresh five- month low within a whisker of Y114.00, there was no sign of the MAS in the market.

By late in Asian hours the U.S. currency had slipped to S$1.6799, down from S$1.6864 toward the end of local trading Friday.

Late in Asia the U.S. dollar was quoted at Rp 6,859, up from Rp 6,835 Friday.

Other Southeast Asian currencies fared less well, with both the Thai baht and the Philippine peso falling steeply against the U.S. dollar.

Toward the end of Asian dealing, the U.S. dollar had risen to 37.3250 baht, up from 37.1200 baht late Friday.

Although the U.S. currency's rise against the baht has been slowed by dollar sales by Thai exporters, the selling pressure is moderate. According to traders, the offers are insufficiently heavy to prevent the U.S. currency testing key resistance levels between 37.40 baht and 37.45 baht.

The Philippine Central Bank's determination to keep interest rates low despite the prospect of rising U.S. rates was the main reason cited for the fall in the Philippine peso.

At Monday's Treasury bill auction, the government held the one-month bill yield unchanged at 8.377 percent by rejecting bids carrying higher yields.

Convinced that the authority will not raise domestic interest rates to defend the peso, offshore players felt they had a green light to bid up the U.S. dollar, pushing it through the resistance at 38.50 pesos

At the close of Monday's trading session, which was curtailed by heavy rain, the U.S. dollar was at 38.600 pesos, up from 38.500 pesos Friday.

In North Asia, the New Taiwan dollar was pushed lower during intraday trading in response to China's moves to step up pressure on Taiwan, with which it has been waging a war of words since last month when Taiwanese president Lee Teng-hui attempted to set cross-straits relations on a state-to-state basis.

U.S. dollar sales late in the session by the Central Bank of China - Taiwan's central bank - succeeded in reversing the market's direction, however. With the central bank constantly poised to intervene in order to dampen any unwelcome volatility, few market participants expect a drastic sell-off in the local currency, even if relations deteriorate further.

At Monday's close, the U.S. dollar was quoted at NT$32.143, down a fraction from NT$32.145 at Saturday's close.

The Korean won recovered from early losses to finish higher on the day, as apparent progress toward restructuring the $9.94 billion of foreign currency debts owed by Korea's stricken Daewoo Group lifted investor confidence.

At the close of local dealing, the U.S. dollar was quoted at 1,200.00 won, down from 1,204.00 won on Friday.

The Indonesian rupiah ended Asian hours little changed. News that Indonesia's election commission had once again delayed the official announcement of the results of June's parliamentary election had little impact on the market.

The announcement of a sharp contraction in Indonesia's trade surplus in June caused by a steep fall in exports to $3.56 billion from $4.48 billion in the same month a year earlier also failed to move the rupiah, underscoring the general lack of interest in the market, and the range-bound nature of current trading.