Most Asian currencies gain ground

Most Asian currencies gain ground

SINGAPORE (Dow Jones): The Singapore dollar and the Thai baht strengthened marginally, while the Philippine peso eased back in another mixed session for Southeast Asian currency markets on Tuesday.

The Indonesian rupiah closed steady against the U.S. dollar Tuesday as participants continued staying on the sidelines ahead of the June election.

The dollar closed at Rp 8,604 in the spot market, slightly down from Rp 8,612 traded late Monday, as state banks sold a meager amount of the U.S. currency.

"It seems that nobody wants to touch the rupiah at this time," said a dealer with a joint venture bank.

In North Asia, bullish sentiment towards local stock markets continued to lift the South Korean won and the new Taiwan dollar, as dealers reported sustained interest to buy regional currencies from foreign investors.

The rise in the Singapore dollar, which saw the U.S. dollar pushed below the psychologically important S$1.70 level, was widely attributed to inflows of foreign portfolio funds destined for investment in the local stock market, which now is up by 35 percent over the year to date.

Sales of the U.S. currency by a U.S. investment bank early in the day caught the market long U.S. dollars against the Singapore dollar, said traders, precipitating further sales, which drove the U.S. currency to an intraday low of S$1.6970.

Even though the authorities failed to intervene to support the U.S. currency at the S$1.70 level, dealers remain fearful that the Monetary Authority of Singapore could step in should the U.S. dollar fall much further and push the Singapore dollar out of line on a trade-weighted basis.

Late in Asian trading the U.S. dollar had recovered slightly from its earlier intraday low to be quoted at S$1.6988, down from S$1.7060 late the previous day.

The slight rise of the Thai baht during Asian trading was dismissed as insignificant by most dealers, who noted that the U.S. currency remained locked in the 37.40 baht to 37.80 baht range it has stuck to for over a week.

After dollar-buying failed to breach the top of that range early Tuesday - with the U.S. currency topping out at THB37.75 - a retracement was only to be expected, they said.

Late in Asia the U.S. currency had eased to 37.6150 baht, down from 37.7150 baht late on Monday.

Elsewhere in the region, the Philippine peso lost ground to the U.S. dollar as traders covered short positions in the U.S. currency built up over recent weeks as the peso has strengthened.

At the close of local dealing, the U.S. dollar was quoted at 38.010 pesos, compared with 37.995 pesos at the end of Monday's trading session.

In North Asia, the South Korean won further extended its upward trend. Dealers said that customary month-end revenue repatriation by local exporters compounded the effect of won- buying by foreign investors, who continue to pour money into the local stock market.

By the end of local trading on Tuesday the U.S. currency had dropped to 1,182.90 won, down from 1,186.00 won the day before.

With officials not overly concerned about the level of the stock market, many observers expect the equity rally to continue.

The new Taiwan dollar also ended higher as foreign fund flows into the local stock market in Taipei continued unabated, despite profit-taking by domestic investors.

At the close, the U.S. dollar was at NT$32.682, down from NT$32.695 at Monday's close.