Regional currencies end mixed against dollar in rough trading

Regional currencies end mixed against dollar in rough trading

SINGAPORE (Dow Jones): Asian currencies are mixed against the
U.S. dollar in choppy trading late Thursday as currency markets
take a breather after a number of volatile sessions earlier in
the week, traders said.

Regional currencies moved largely sideways during the session,
even as the U.S. dollar moved quietly higher against the yen, the
residual effect of a strong showing on Wall Street overnight. The
Dow Jones Industrial Average closed up 188 points at 10588
points.

At 0800 GMT (4:00 a.m. EDT), the U.S. dollar was trading at
Y107.85, up from Y107.13 in late Asian trading Wednesday.

While the Korean won and Indonesian rupiah managed to move
higher against the U.S. dollar, the Singapore dollar, Philippine
peso, and Thai baht faded during the session. The New Taiwan
dollar ended the session flat.

Traders said regional currencies were moving on domestic news
for the moment, but cautioned that Japan's decision Friday on the
size of its supplementary budget could roil markets. Forecasts
are anywhere from Y10 trillion to more than Y13 trillion.
Economists said the higher the figure, the more Japan's domestic
fixed income markets would come under pressure.

Japanese monetary and fiscal policy decisions aside, regional
currencies have by and large been mirroring movement in the Thai
baht in recent sessions, especially after the Bank of Thailand
Tuesday reinterpreted an existing rule on lending baht to
nonresident parties.

At 0800 GMT, the U.S. dollar was trading at 39.395 baht, up
from 39.085 baht in late Asian trading, but well down from 41.24
baht Sept. 29.

Traders and currency strategists are now saying that October
is shaping up to be a giant game of chance, given the Oct. 20
presidential elections in Indonesia.

They said the focus will start to shift away from the baht and
toward the uncertain fortunes awaiting the Indonesian rupiah. As
one currency strategists said, "Rupiah strength is impossible to
predict in the short-term because it is based on politics not
economic data."

That political arena is becoming increasingly murky, following
the announcement that National Awakening Party's Abdurrahman "Gus
Dur" Wahid would campaign for the presidency.

Nevertheless, Simon Flint, global currency strategist at Bank
of America in Hong Kong, predicts that Megawati Soekarnoputri
will ultimately prevail, but only if she manages to convince Gen.
Wiranto to accept the vice-presidency.

"We expect that the rupiah will breach Rp 7,000 on news of
Megawati's victory. A reasonable target would be Rp 6,700 in the
thin market conditions," Flint said.

He said nervous investors can reduce the high risk of a rupiah
trade by taking on proxy positions, especially in the baht and
Philippine peso. The baht represents the closest proxy, with a
0.92 correlation coefficient, he said. If the U.S. dollar did
fall to Rp 6,700, the baht would likely hit 38.72 baht against
the U.S. dollar.

At 0800 GMT, the U.S. dollar was quoted at Rp 7,735, down
slightly from Rp 7,740 late Wednesday.

On the Philippine Dealing System, the U.S. dollar was trading
at 40.325 pesos, up from 39.99 pesos in late trading Wednesday.

The U.S. dollar was also trading at S$1.6788, up from S$1.6764
late Wednesday.

Bank of America's Flint said the Singapore dollar would likely
climb to S$1.665 against the U.S. dollar if a Megawati election
victory pushed the U.S. dollar down to Rp 6,700.

In other markets, the U.S. dollar was trading at 1,201 won,
down from 1.203.7 won in late trading Wednesday. South Korea's
stock market index climbed once again during the session, closing
1.8 percent higher at 851.15 points - an 8 percent rise over the
intraweek low of 788.73 points.

South Korea's gross domestic product is expected to grow 11
percent in the third quarter and 9.3 percent in the fourth
quarter, according to Bank of Korea Governor Chon Chol-hwan. GDP
growth for the year is expected to be 8.8 percent, a sharp rise
from a 5.8 percent contraction in 1998.

Against the New Taiwan dollar, the U.S. dollar was trading at
NT$31.78, flat from late Wednesday.