DJ Asian Currencies Higher Late;Dlr Outlook Remains Bearish

DJ Asian Currencies Higher Late;Dlr Outlook Remains Bearish

Alan Yonan Jr.
Dow Jones
Singapore

The dollar declined further against most Asian currencies
Tuesday, reflecting the increasingly bearish global outlook for
corporate America.

The South Korean won, New Taiwan dollar, Thai baht and
Singapore dollar all strengthened to fresh multi-month highs. The
Philippine peso also edged higher, while the Indonesian rupiah
was unchanged.

Falling stock prices and a rash of accounting scandals in the
U.S. have fueled a sharp decline in the dollar against most Asian
currencies during past four months, and analysts say the currency
has more room to fall.

"Looking at the big picture, the dollar's recent decline is
nothing compared to the rise it has experienced (since the mid
1990s)," said Hui Chin Chong, currency strategist at JP Morgan in
Singapore.

The Federal Reserve's trade-weighted dollar index, a broad
measure of the U.S. currency's value, appreciated around 43
percent between 1995 and this February. Since then the index has
fallen less than 3 percent.

"Using our long-term model, JP Morgan still sees the dollar as
overvalued by 5 percent and 10 percent," Chong said.

JP Morgan is recommending investors take short dollar
positions against many of the Asian regional currencies.

The Singapore dollar continued its advance, hitting a fresh
10-month high against its U.S. counterpart.

The U.S. dollar traded as low as S$1.7338 in the morning
session, but edged up to S$1.7365 after the Singapore government
issued disappointing export data for June.

However, the interest in the U.S. dollar quickly waned and by
the end of the day it had fallen back to S$1.7351, down from
S$1.7398 late Monday.

Government authorities in Seoul tried in vain to slow the
won's rise as the currency strengthened to a new 20-month high.

The dollar closed at 1,171.8 won, down from 1,176.6 won
Monday.

The dollar bounced off its intraday low of 1,169.5 won to a
high of 1,176.5 won after state-run banks bought about $200
million in the open market on behalf of the government to offset
brisk dollar sales.

The state banks entered the market after an official at the
Ministry of Finance and Economy said the government "hasn't
changed its will" to stabilize the dollar/won exchange rate.

But the overwhelming market sentiment against the dollar
fueled selling that quickly erased most of the currency's gains.

Taiwan's central bank also continued its effort to cap the
local currency's rise. U.S. dollar purchases by the central bank
accounted for around two-thirds of the total US$1.06 billion
total trading volume, dealers estimated.

Despite the intervention, the U.S. dollar fell to a fresh 14-
month low of NT$33.100, down from NT$33.206 Monday.

Exporters, who generate a substantial amount of their earnings
in U.S. dollars, aggressively sold the currency on fears that it
would fall even further.

The dollar fell to a 23-month low against the baht after a
fall through a 40.500 baht support level triggered stop loss
selling.

Near the end of Asian trading the dollar was quoted at 40.350
baht, down from 40.720 baht a day earlier.

The next support level for the dollar is seen at 40.300 baht,
and a break through that sets up a test of the key 40.000 baht
level.

Against the peso, the dollar closed at 50.400 pesos on the
Philippine Dealing System, down from Friday's close of 50.495
pesos.

Philippine financial markets were closed Monday for local
elections.

The U.S. currency's slide against the peso was slowed by
dollar demand from corporations, particularly the oil companies,
traders said.

The rupiah closed off its lows after the government managed to
raise $125 million through the sale of a small stake in PT
Telekomunikasi Indonesia.

The dollar had traded as high as Rp 9,095 in early trade amid
continued local corporate demand for the U.S. currency.

The prospect of foreign inflows associated with the sale of
the Telekom stake pushed the dollar to Rp 9,040 at the close,
unchanged from Monday.