Most Asian monies up, rupiah down

Most Asian monies up, rupiah down

Alan Yonan Jr., Dow Jones, Singapore

Most Asian currencies strengthened against the dollar Tuesday,
led by the Thai baht's ascent to a 16-month high.

The South Korean won firmed for the first time in four
sessions, prompting renewed concerns from government authorities
about the currency's strength.

The Singapore dollar, New Taiwan dollar and Philippine peso
also strengthened, while the Indonesian rupiah weakened.

Unlike their counterparts in Seoul, Thai monetary officials
said they weren't worried about the baht's recent appreciation.
Late in Asian trading the dollar was quoted at 42.285 baht, down
from 42.425 baht late Monday and its weakest finish since
February 2001.

But Bank of Thailand Deputy Governor Pakorn Malakul Na Ayudhya
told reporters the baht's level was not hurting the country's
export competitiveness because other Asian currencies have been
strengthening against the dollar as well.

He wouldn't say how much the baht has appreciated on a trade-
weighted basis, but JP Morgan calculates that the currency has
gained just under 2 percent since the start of the year.

Strong foreign demand for Thai stocks has helped fuel the
baht's gains.

In Seoul, the Ministry of Finance and Economy issued a
statement saying it was concerned over the market's "expectations
for an excessive dollar fall" against the won.

"Some investors are selling (the U.S. dollar) to take
advantage of such expectations," the Ministry said in the
statement.

The dollar closed at 1,225.5 won, down from 1,230.5 won
Monday.

South Korean monetary authorities are much more concerned than
their other Asian counterparts about the impact of currency
appreciation on their export competitiveness, said James Malcolm,
foreign exchange strategist at JP Morgan in Singapore.

"Authorities over the last two weeks have become increasingly
vocal in an attempt to stem the won's appreciation trend," he
said.

The won has appreciated nearly 6 percent in trade-weighted
terms since the start of the year. The New Taiwan dollar, by
comparison, is virtually unchanged, Malcolm said.

There are signs that the Bank of Korea has intervened in the
market too, buying modest amounts of dollars through domestic
banks to smooth out volatility in the exchange rate, he said. But
it is unlikely the central bank will intervene on a large scale
like the Bank of Japan has, Malcolm added.

JP Morgan is predicting the won will continue to strengthen
against the dollar in line with South Korea's economic recovery.
The investment bank has set a year-end target of 1,180 won for
the dollar.

Dollar demand from local companies pushed the U.S. currency
higher against the Indonesian rupiah, but underlying sentiment
remains rupiah bullish, dealers said.

The market's enthusiasm over Monday's London Club agreement to
restructure US$1.3 billion in Indonesian debt carried over into
Tuesday, pushing the dollar down to Rp 8,655 in early trading.

But dollar bids from some local companies, which dealers
suspected were led by state-owned oil and gas company Pertamina,
pulled the U.S. currency from its lows. Local companies usually
buy dollars to pay maturing offshore debts and to finance
imports.

Late in the session the dollar was quoted at Rp 8,765, up from
Rp 8,740 late Monday.

The market's positive outlook toward the rupiah is also being
fueled by expectations that the Indonesian Bank Restructuring
Agency will sell an estimated Rp 150 trillion of bad loans this
month. The sales are expected to induce local investors to bring
cash from overseas to buy the loans at a discount.

The negative U.S. dollar environment prompted Taiwanese
exporters to unload the currency against the New Taiwan dollar.

The U.S. dollar closed at NT$34.117, down from NT$34.164
Monday.

Many interbank traders who covered short U.S. dollar positions
last week amid sluggishness in the yen cut their positions in the
U.S. currency Tuesday as the yen held firm.

The Taiwan central bank bought the U.S. currency to slow the
local dollar's rise Tuesday but wasn't very aggressive, dealers
said.

The Philippine peso benefited from the bullish trend in Asian
currencies, despite investor concerns about political uncertainty
and the possibility of the government overshooting its budget
deficit target for the year.

The Singapore dollar traded in a narrow range, finishing
modestly stronger in line with its regional peers.

Near the end of Asian trading the U.S. dollar was quoted at
S$1.7891, down from S$1.7935 late Monday.