Most Asian currencies rise on foreign investment inflow

Most Asian currencies rise on foreign investment inflow

SINGAPORE (Dow Jones): The won dropped steeply Friday after
South Korea's finance minister announced a US$4.6 billion package
of measures aimed at suppressing the currency's headlong rise
against the U.S. dollar.

In Southeast Asia, the Indonesian rupiah, the Thai baht and
the Philippine peso were all lifted by inflows of foreign
investment funds. The Singapore dollar, however, fell back as
traders worried about the possibility of intervention to hold
down the local currency.

Throughout Asia, investment flows into local equity markets
maintained their momentum Friday, adding to the upward pressure
on regional currencies.

The U.S. dollar rocketed in response, rising to a high of
1,205.00 won from its earlier intraday low of 1,172.80 won.

Over the past few weeks the government has intervened in the
foreign market almost on a daily basis by purchasing U.S. dollars
through the Export-Import Bank, according to traders in Seoul.

At the close of Friday's domestic trading, the U.S. currency
was at 1,188.00 won, up from 1,175.50 won at Thursday's close.

Elsewhere in the region, Southeast Asian currencies continued
their bullish run, buoyed by heavy inflows of foreign investment
funds into local stock markets.

Dealers even reported strong offshore interest in investing in
the Indonesian rupiah, a currency which has been off most
investor's radar screens for the last year.

However, with monetary easing elsewhere in Asia reducing the
yield on other regional currencies to the slimmest of premiums
over U.S. dollar interest rates, short-term rupiah yields of
30.0% are looking increasingly enticing, say traders.

Offshore buying interest drove the Indonesian currency to its
highest level since the beginning of January in early trading, as
the U.S. dollar was forced down to a low of Rp 8,200. The U.S.
dollar recovered slightly later, however, on buying from onshore
players.

Late in the Asian day, the U.S. dollar had edged back up to Rp
8,230, but was still well below Rp 8,382 late on Thursday.

The Thai baht also rose Friday, after bullish investor
sentiment was further heightened by Moody's Investor Service's
decision to raise the credit rating outlook on five of Thailand's
major banks.

Late in Asian trading, the U.S. dollar was quoted at 37.2350
baht, down from 37.4325 baht late the previous day.

Sentiment towards Thailand is expected to remain strongly
positive over the coming week, with dealers predicting the U.S.
dollar will fall further towards 37.0000 baht after the
announcement late Friday of a $987 million trade surplus for
March, up from $668 million in February.

The Philippine peso also benefited from the regional trend,
rising against the U.S. dollar, which dipped again below the
38.000 pesos to close at 37.989 pesos, down from 38.020 pesos
Thursday.

The Singapore dollar, however, failed to join in the regional
party despite a bullish stock market and news that industrial
output rose by 6.5 percent in the first quarter.

The positive outlook was eclipsed by aggressive U.S. dollar
buying from local banks, which lent weight to unconfirmed market
suspicions that the Monetary Authority of Singapore was buying
U.S. dollars at the S$1.6930 level.

By the end of interbank trading in Asia, the U.S. currency had
been pushed up to S431.7030, up sharply from S$1.6962 late on
Thursday.

In North Asia the New Taiwan dollar closed flat, with the U.S.
dollar ending local trading at NT$32.688, compared with NT$32.689
the previous day.