Most regional currencies higher

Most regional currencies higher

SINGAPORE (Dow Jones): Asian currency bears were forced to
retreat yesterday, as a steep rise in the yen combined with sharp
stock market rallies across the region to push Southeast Asian
currencies higher against the U.S. dollar.

Japanese threats of central bank intervention to support the
yen, and actual intervention by the Hong Kong government to shore
up the Hang Seng stock index, spurred market participants to
unwind outstanding long U.S. dollar positions, boosting
currencies throughout the region.

The Japanese yen held firm against the dollar in late trading
after rallying on market fears of central bank intervention,
dealers said.

In late trade, the yen traded at 144.15-18 against the U.S.
dollar, compared with 145.13 mid-morning here and 145.88 yen in
New York late Tuesday.

Among the best performers was the rupiah, which rose to its
highest level in over two months as the U.S. dollar dropped below
the psychologically important 12,000 rupiah level for the first
time since early June.

"Now that Indonesia is rescheduling its foreign debt, dollar
liquidity should be easier, so the state banks are unloading
their long U.S. dollar positions," explained a trader at a joint
venture bank in Jakarta.

The baht also ended substantially higher against the U.S.
currency yesterday, despite being sold off its intraday high in
late Asian trading.

Offshore market participants, said traders, were caught long
by the Bank of Thailand's assertion late Tuesday that it plans to
close its $11.3 billion-worth of outstanding foreign exchange
swaps, without rolling the contracts over.

Anticipating a squeeze in baht liquidity, U.S. funds rushed to
liquidate their short baht/long U.S. dollar positions, pushing
the U.S. currency down against the baht in the spot market.

Late in Asian trading hours the U.S. dollar was quoted at
41.5650 baht, down from 41.69 baht the previous day.

Among other regional currencies, the ringgit and the Singapore
dollar also rose, lifted primarily by Japanese officials'
warnings that intervention to support the yen may be imminent.

"I don't think anyone really believes that intervention can
stop the dollar's up-trend, but at the same time traders are very
short term in outlook. No-one wants to be the one who buys
dollars five minutes before the Bank of Japan intervenes," said
Marshall Gittler, chief currency strategist at Bank of America in
Hong Kong.

Against the ringgit the U.S. dollar ended Asian trading at
4.2050 ringgit, down from 4.2350 ringgit the day before. The U.S.
dollar is likely to find support at around 2.1800 ringgit to
2.2000 ringgit, with bids emerging at those levels, say traders.

Against the Singapore dollar, the U.S. currency dropped to
S$1.7565 late in Asian trading, down from S$1.7689 late on
Tuesday.

Although the local currency has depreciated by about 20
percent against the U.S. dollar since the start of the Asian
crisis last July, over the same period it has risen against every
freely-floating currency in Asia, raising worries that an overly
strong Singapore dollar is rendering exports uncompetitive.

In the spot market the U.S. dollar also slipped against the
Hong Kong dollar, ending Asian hours at HK$7.7465, down from
HK$7.7490 late the previous day. This was after the Hong Kong
authorities again intervened in the stock market, buying equities
in an attempt to flush out speculators running short positions in
the benchmark Hang Seng stock index.

The government's action also helped to push down Hong Kong
dollar interest rates, as market participants bailed out of short
Hong Kong dollar positions in the forward market.

Late in Asia the three-month US$/HK$ forward was trading at an
implied Hong Kong dollar interest rate of 11.37 percent, down
from 12.30 percent the day before.

Although the Chinese yuan ended trading in the official spot
market unmoved on the day, with the U.S. dollar flat at 8.2799
yuan (CNY), downward pressure on the yuan in the offshore non-
deliverable forward market also eased.

In North Asian markets, both the Korean won and the New Taiwan
dollar rose from Tuesday's levels. The U.S. dollar closed at
1,305 won, down from 1,319 won. The U.S. dollar also ended at
34.699 New Taiwan dollars, down from NT$34.734 in response to the
yen's rise and sales of the U.S. currency by the Taiwanese
central bank.

The Philippine peso, however, failed to benefit from the
regional rebound, with the U.S. dollar ending domestic trading at
42.920 pesos, up from 42.850 pesos at the previous close.