Most Asian currencies down late on Monday

Most Asian currencies down late on Monday

Barry Deely, Dow Jones, Singapore

A Bank of Japan survey showing a sharp deterioration in
business sentiment was the catalyst for a mild sell off in most
Asian currencies Monday, with the closure of some markets and the
approach of a key meeting of U.S. Federal Reserve policy makers
limiting activity.

The Thai baht, Singapore dollar, Philippine peso and
Indonesian rupiah were all lower in late Asian trade, while
financial markets in South Korea, Taiwan and China were closed
for national holidays.

The session began with a batch of bad news from the BOJ, which
reported that the main diffusion index in its latest tankan
survey of business sentiment registered a minus 33 reading for
large manufacturers, compared with minus 16 three months ago.

It was the biggest drop over three months since March 1998,
when the region was in financial crisis and Japan was verging on
a meltdown of its banking system. Also, some 25% of surveyed
companies sent in their responses before the Sept. 11 terrorist
attacks in the U.S., the BOJ said. That probably suggests the
latest tankan didn't fully reflect the sort of negative fallout
from the attacks that recently prompted the International
Monetary Fund to slash its forecast for world economic growth
this year to 2.6%.

Against that backdrop, Asian currencies that traded Monday
opened softer across the board.

In Singapore, the U.S. dollar rose to an intraday high of
S$1.7680 at the start of the session, just as the U.S. currency
was approaching Y119.90 in Tokyo. When the dollar's move higher
against the yen stalled, the Singapore dollar retraced some of
its losses.

At the end of the session, the dollar was quoted at S$1.7674,
up from S$1.7662 in Asia late Friday.

Trading was somewhat muted later in the session, however, as
many players were reluctant to take new positions ahead of a
meeting Tuesday by the Federal Reserve's policy-setting Federal
Open Market Committee, which is expected to lower its overnight
Fed funds target to 2.5% from 3%.

Elsewhere, some currencies were dragged lower by concerns over
the possibility of a retaliatory strike by the U.S. in
Afghanistan, where the prime suspect in the terrorist attacks,
Osama bin Laden, is in hiding.

The Indonesian rupiah ended sharply lower, pushing the dollar
up to IDR9,880 from IDR9,710 late Friday, amid notions that a
U.S. assault on the Afghanistan's Taliban might spur social
instability in Indonesia, where the population is predominantly
Muslim.

The move lower in the rupiah also reflected steady unwinding
of positions built up over the last few months, when investors
were giddy over the prospects of reform in Indonesia following
the election of Megawati Sukarnoputri as the nation's new
president.

Some of that enthusiasm has cooled recently as investors
considered the many obstacles confronting Megawati. As if to
underscore this reality, late Monday, Indonesia's Supreme Court
reversed its guilty verdict against Hutomo "Tommy" Mandala Putra,
the fugitive son of former dictator Suharto.

Tommy went into hiding last year after the court found him
guilty of fraud in a land scam. Attempts to find and arrest Tommy
have come to nothing in recent months, even though the manhunt
grew intense early this year after gunmen on motorcycles shot
dead one of the Supreme Court judges that had handed down the
original 18-month sentence to Tommy. Police repeatedly said they
suspect Tommy of involvement in the assassination.

Foreign investors may reconsider any plans to invest in
Indonesia following this development.

The weaker rupiah pulled the Thai baht lower, as dealers use
the more liquid baht as proxy. Late in the day, the dollar was
quoted at THB44.52, up from THB44.385 late Friday. The U.S.
currency rose as high as THB44.545 Monday before dollar selling
by exporters combined with concerns about possible central bank
intervention helped the local currency pare its losses.

Traders said the session was marked by relative calm, a
welcome sign that financial markets may be starting to take
concerns about global security issues in stride somewhat.

"Overall the market is calmer. This the first sign of calm
since the Sept. 11 events," said Thio Chin Loo, a regional
currency strategist at BNP Paribas.

"The market is beginning to realize that the fallout from the
attacks is not as bad as some had expected, markets are settling
down," she added.

Meantime, in Manila the dollar closed at its intraday high of
51.40 pesos, up from PHP51.320 Friday.