Most Asian currencies weak, rupiah drops

Most Asian currencies weak, rupiah drops

SINGAPORE (Reuters): Asian regional currencies got off to a
mostly softer start after the long holiday weekend with the
market still worried about social unrest in Indonesia and a weak
yen, dealers said on Tuesday.

But India provided some distraction from the ongoing regional
problems after it carried out a series of underground nuclear
tests on Monday. Leaders from around the globe condemned the act
with the U.S. and Japan threatening sanctions.

Japan said it was considering freezing yen loans and grants of
aid to India.

But analysts played down fears that potential economic
sanctions would seriously hurt the economy given India's external
sector was only around 12 percent of GDP. Exporters would however
be vulnerable.

The rupee opened sharply weaker against the forward dollar in
volatile trade on fears foreign capital inflows would dry up but
spot was steady at 39.775/780 per dollar at 0817 GMT compared
with yesterday's close at 39.740.

The Taiwan dollar also weakened against the background of good
demand for U.S. dollars on the non-delivery forward market.

The Thai baht inched down but tight liquidity offshore
continued to support the spot rate.

The Singapore dollar slipped after a J.P. Morgan research
report said the economy faced the threat of a recession this
year.

Dealers also attributed part of the decline to a survey in a
local newspaper, which said Singapore companies were slashing
investment budgets this year because of an unexpected slowdown in
sales.

The Malaysian ringgit bucked the regional trend and recovered
early losses to stand stronger by late trade although there were
few fresh factors to influence sentiment and trading was largely
confined to position adjustment.

The ringgit is expected to trade in a 3.80 to 3.90 ringgit
range in the near-term.

The Philippine peso surged following a relatively peaceful
presidential election in the Philippines. While at least eight
people were killed in polling day clashes, violence was well down
from past elections. But traders said the market was still
cautious at least until after the ballots have been counted.

The Korean won reversed its slide in late trade but the
topside is seen capped by general concerns about the economy
after rating agency Moody's downgraded the debt ratings of 19
Korean banks at the weekend.

A senior finance ministry official said the won's value was
unlikely to change much from the current levels despite "various
sources of instability" including Indonesia.