Most Asian currencies lower on yen, politics

Most Asian currencies lower on yen, politics

HONG KONG (Dow Jones): Asian currency traders had one eye on a shaky Japanese yen and the other on the Indonesian rupiah and regional politics as most major currencies lost ground Tuesday, albeit in trading ranges.

In Japan, the yen is falling victim to the view that last Friday's rate hike, and end to the Bank of Japan's zero-rate policy, was purely an effort at asserting its independence and wasn't economically sound. With that in mind, the U.S. dollar rose to 109.32 yen by the late session, from 108.70 yen in late Asian trading Monday. That's down from 109.47 yen late in New York, but dealers say a move above the 110.00 yen level is in the works soon.

In Southeast Asia, the rupiah itself held its own against losses in the yen - and associated selling of the Philippine peso, Thai baht and Singapore dollar - even as skepticism grew about the Indonesian political situation. Some analysts said that suggests investors are still keen to buy the currency and are only awaiting an opportunity.

But a trader with a large U.S. bank, echoing others, said the U.S. dollar is well supported now at Rp 8,200. The rupiah will have trouble breaking that level and resuming a month-long rally until Indonesian President Abdurrahman Wahid's puts substance behind his pledge to delegate more responsibility to Vice President Megawati Sukarnoputri.

The U.S. currency was quoted at Rp 8,215 late in the day, down from 8,230 late Monday.

At any rate, as market players grow fretful about the yen, other Asian currencies came under modest selling pressure that pushed them into the weak end of recent trading ranges. "Losses on the yen have definitely hurt the Singapore dollar and Thai baht today," said a dealer with another U.S. house.

Against the Thai baht, the U.S. dollar was quoted at 40.665 baht, up from 40.595 late Monday.

Regional concerns aside, the Thai currency is also coming under the sway of election politics. "The mood in Thailand is that politics could become more fractious and that will be Thai- baht negative," said Banque Paribas Currency Strategist Thio Chin Loo.

Dealers were unnerved Tuesday when the Thai Rak Thai party fired up its election campaign with a vow to reverse all key policies of the current Democrat-led government.

The dealer with the U.S. house said the U.S. dollar will stick to a range of 40.5 baht and 41.5 baht.

In Singapore, the U.S. dollar was quoted around S$1.7187, up from S$1.7131 late Monday. "A Hong Kong bank has been a consistent buyer" of U.S. dollars, said the first dealer. Other traders said early in the session that the U.S. dollar was unlikely to break above S$1.7200 in the short term amid concerns the Monetary Authority of Singapore might defend the local currency.

Against the Philippine peso, the U.S. dollar held steady through much of the session at around 44.88 pesos, but dipped slightly late Tuesday to 44.875 pesos. An unresolved set of political problems will keep the currency on the defensive, however, said dealers.

The weakness in the yen also led the New Taiwan dollar lower late in the day, with the U.S. dollar at NT$31.099, compared with Monday's close of NT$31.085.