Dollar rallies on BOJ intervention

Dollar rallies on BOJ intervention

Dow Jones, Jakarta

The dollar recovered from lows against most Asian currencies
Friday in the wake of Japanese intervention, but ended mostly
down in sluggish pre-World Cup soccer trade due to doubts about
the strength of the U.S. economic recovery.

Comments from a senior U.S. official in The Wall Street
Journal - which suggested Washington is unlikely to step in any
time soon to help prop up the U.S. dollar - helped dampen the
effect on Asian currencies of Japanese efforts to weaken its
currency.

Without intervention from the administration of U.S. President
George W. Bush - which has so far stayed out of tampering with
the U.S. dollar's level - the U.S. currency is likely to continue
to fall against the yen and other Asian currencies in the coming
weeks, traders said.

Lingering doubts about the strength of America's current
recovery from recession and Wall Street sluggishness - combined
with signs of strength in Europe and even Japan - have led some
investors to shift out of U.S. dollar-denominated assets in
recent days.

Japan's Finance Minister Masajuro Shiokawa confirmed Friday
that authorities intervened to sell U.S. dollars for the third
time in a little over a weak amid concerns that a strong yen is
hurting the country's nascent economic recovery.

The U.S. currency jumped over one yen to about 124.30 yen
after the ministry bought U.S. dollars for yen, traders said. But
the U.S. unit quickly fell back to just below 124 yen in late
Asian trading, signaling the market remains bearish toward the
dollar.

South Korea's won closed Asian trading at a fresh 17-month
high against the U.S. dollar at 1,226.3 won compared with 1,229.5
won at Thursday's close.

The U.S. dollar came back from an intraday low at 1,222.50 won
in line with the yen's slide, but exporter selling, and continued
bearishness toward the U.S. economy kept the U.S. dollar under
pressure.

Although South Korean stocks ended 2.4 percent lower Friday,
the country's equity market has been a major beneficiary of the
reallocation of assets out of the U.S. in recent weeks.

The New Taiwan dollar also ended stronger at NT$34.145 against
the U.S. unit from NT$34.190 at the previous close, but off an
intraday high of NT$34.048 on the Japanese intervention.

Only the Philippine peso ended lower, as the yen decline
pushed the U.S. dollar to an intraday high at 50.470 pesos. The
U.S. dollar ended at 50.250 pesos, off its high, but still up
from 49.915 pesos at Thursday's close.

But the peso also took a hit from news that Hong-Kong listed
First Pacific Co. is in talks with an "independent investor" to
sell its holding in Philippine Long Distance Telephone Co. The
market thinks local tycoon John Gokongwei might be bidding for
the stake and will need to sell pesos to get U.S. dollars for the
purchase through the market.

Indonesia's rupiah ended higher in line with the general weak
sentiment toward the U.S. dollar in the region and as exporters
moved foreign-currency earnings back home.

The rupiah was trading at a new nine-month high against the
U.S. dollar late Friday in Asia at Rp 8,700, stronger than Rp
8,830 at Thursday's close.

Unlike its Asian counterparts, the rupiah failed to move on
intervention against the yen. Indonesia's economy is perhaps the
least linked to movements in the Japanese economy.

South Korean and Taiwanese currencies are particularly
susceptible movements in the yen as the countries compete with
Japan for export markets. Indonesia's economy, which is based on
lower-end manufactured exports, has been generally decoupled from
the yen this year.

Indonesia's cancellation of an auction of a 51 percent stake
in PT Bank Niaga due to low bids this week has failed to
immediately hurt sentiment toward the rupiah.

Moving ahead quickly with the sale is crucial to show
Indonesia is still on track with asset sales needed to help its
banking system back to health. But while the International
Monetary Fund continues to support Indonesia, the downside for
the currency remains limited.

The Singapore dollar was trading late Friday at S$1.7844 to
the U.S. dollar, stronger than S$1.7890 late Thursday.

The U.S. dollar moved to an intraday high at S$1.7870 but the
rise was short lived as market participants had anticipated
Japanese intervention since early Friday and kept their positions
thin, especially as the weekend approaches, dealers said.

The Thai baht closed at a 15-month high of 42.37 baht to the
U.S. dollar late after hitting an intraday low around of 42.41
baht after the yen's fall. The dollar closed Thursday at 42.455
baht.