Asian monies weaken, central banks may sell their currencies

Asian monies weaken, central banks may sell their currencies

Christina Soon, Bloomberg, Singapore

The Singapore dollar fell, leading its Asian counterparts
lower, after the government said regional central banks may sell
their currencies to help sustain export-driven economic growth.

Demand from investors abroad has helped fuel a 12.9 percent
gain in the benchmark Straits Times Index of Singapore equities
in the past three months, and a 1.7 percent increase in the
currency.

``They're just being careful not to let this hot money flow
into their currencies,'' said Erik Herzfeld, head of Singapore
options dealing at J.P. Morgan Chase & Co. `` Otherwise, the
appreciation will be too fast.'' Currency sales ``will continue
to be the theme.'

The Singapore dollar fell 0.4 percent to S$1.6961 against the
U.S. currency at 4:02 p.m. local time. The won weakened 0.1
percent to 1,171.55, according to Seoul Money Brokerage Services
Ltd.

Strengthening currencies raise the cost of a country's exports
for consumers abroad, making it tougher for regional economies to
rely on sales overseas to bolster economic growth.

Record foreign-currency reserves in South Korea and Taiwan and
rising holdings in Singapore suggest their central banks have
been selling their currencies for dollars, according to Jimmy
Koh, head of treasury research at UOB Group, an affiliate of
United Overseas Bank Ltd., Singapore's second-largest lender.

Singapore's government raised its economic-growth projection
for this year to as much as 5.5 percent on expectations of rising
worldwide demand, versus 1.1 percent in 2003. The island's
exports last month rose a seasonally adjusted 3.6 percent from
December.

``We expect Asian central banks to intervene heavily,''
Friedrich Wu, director of Singapore's Ministry of Trade and
Industry economics division, said at a press briefing. The
Monetary Authority of Singapore declined to comment on its
currency policy.

Fourth-quarter gross domestic product rose an annual 11
percent in Singapore, a second quarter of expansion, after
surging a revised 16 percent in the July-September quarter, the
Trade and Industry Ministry said in a statement.

Growth was faster than the government's earlier estimate of an
annual 7.9 percent expansion in the final quarter of 2003 and
topped the median forecast of seven economists in a Bloomberg
News survey for an annual 9 percent expansion.