Most Asian currencies fell in late trade

Most Asian currencies fell in late trade

SINGAPORE (Dow Jones): Most Asian currencies came under renewed pressure late Wednesday as many regional bourses felt the pain from Wall Street's disappointment over the Federal Reserve's interest rate cut, and as the Japanese yen resumed its descent.

The only currency that avoided getting sucked into the downdraft was the Indonesian rupiah, which was steady as local corporates held back their dollar demand and amid fears of central bank intervention, dealers said.

The Indonesian currency was around 10,420 rupiah to the dollar, unchanged from Tuesday.

The Fed's move Tuesday to lower short-term interest rates by half a percentage point brings rates down a total of 1.5 percentage points this year. And officials made clear they are prepared to do much more - possibly even before their next official rate-setting session May 15.

With many investors hoping for a three-quarter point cut, stocks plunged following the Fed's announcement. The Dow Jones Industrial Average ended the day down 238.35 points, or 2.4 percent, to 9720.76, its lowest close since March 1999.

"The Fed still expects excess capacity to last for 'some time,' although the inventory adjustment appears well underway," said DBS market strategist Philip Wee.

For the region's economies, which rely heavily on exports to the U.S., "easier monetary policy is unlikely to be of much help in supporting growth even if Asian central banks can respond with lower rates," Wee said.

Foreign exchange participants, who had unwound their dollar positions Tuesday to lock in profits, revived their dollar buying spree Wednesday in most Asian currency markets, dealers said.

The currencies also felt another blow from the Japanese yen's retreat below Y123 against the dollar, following its rebound earlier this week.

"Asian currencies began rallying yesterday in anticipation of a Fed cut, but any rally in Asia will be shallow or short-lived without a rally in the yen," said Peter Redward, a regional currency strategist at Deutsche Bank.

The currencies of South Korea and Taiwan - both of which compete against Japan in similar export markets - felt the brunt of the region's pressure.

The dollar ended at 1,305.3 won, up from 1,295.90 won Tuesday.

The New Taiwan dollar's fall to as low as NT$32.880 against its U.S. counterpart heightened expectations of an imminent descent toward the NT$33 level.

The New Taiwan dollar, however, regained its footing toward the close of trading as the local central bank came to its defense, selling US$150 million in the market, dealers said.

The New Taiwan dollar ended at NT32.771 to the U.S. currency, from NT32.775 Tuesday.

The Singapore dollar's fall accelerated late in the day, breaking below S$1.7800 support for the first time since August 1998, as several foreign banks bid up the U.S. currency, dealers said.

With local banks not offering to sell U.S. dollars Wednesday, the market interpreted this to mean that the Monetary Authority of Singapore would tolerate a further weakening of the local currency with the slump in regional foreign exchange markets, dealers said.

"Since the MAS didn't make any attempt to prop up the Singapore dollar, they pushed the U.S. dollar higher," said a dealer.

The U.S. dollar was at S$1.7802, up from S$1.7722 late Tuesday.

In the Thai currency market, the dollar was at 44.165 baht, up from 43.965 baht late Tuesday.

On the Philippine Dealing System, the dollar closed higher at 48.633 pesos, compared with 48.44 pesos Tuesday.