SE Asian currencies down against dollar

SE Asian currencies down against dollar

SINGAPORE (Dow Jones): Southeast Asian currencies fell afresh
yesterday to finish the day, and the week, lower against the U.S.
dollar.

And as sentiment towards the yen continues to dictate the
direction of trading in the regional currencies, many market
participants are predicting further depreciation in the coming
week, after the results of Sunday's elections to the upper house
of the Japanese Parliament are announced.

"Most people have squared up by now," said a regional currency
trader at a U.S. bank in Singapore, speaking late on Friday
afternoon.

"In the medium term it looks like the yen will be weaker and
that means that the regional currencies will weaken too. But it
would be silly to stick your neck out and take positions until
the Japanese election is out of the way," he said.

Anything other than a resounding victory for the ruling
Liberal Democratic Party will mean a sell-off in Asian currencies
when trading resumes on Monday, as market players reestablish
their long U.S. dollar positions, say dealers.

"The market is very sentiment-driven at the moment," said Koh
Foong Yin, head of research at Overseas Union Bank in Singapore.

Although Koh dismisses as small the fundamental economic
impact of many of the developments which have swayed regional
currencies in recent sessions, she acknowledges their power to
depress sentiment in the short term.

"If the yen weakens and the current tension between Malaysia
and Singapore gets any worse then we are looking at the ringgit
going to 5.00 (ringgit to the U.S. dollar) over the longer term,"
said the chief dealer at one U.S. bank in Singapore. In that
case, with the Malaysian currency projected to fall to $S0.38,
the Singapore dollar will go to S$1.90 to the U.S. currency, he
said.

Late in Asia on Friday, the U.S. dollar was quoted at 4.28
ringgit, up from 4.2250 ringgit late the previous day, and 4.1450
ringgit a week before.

Against the Singapore dollar the U.S. dollar was at S$1.7306,
up sharply from S$1.7151 late on Thursday and S$1.6966 the
previous Friday.

Even if the yen does resume its slide against the U.S. dollar,
not all regional currencies will be equally affected, however.

Baht

"The dollar will struggle to go above 42 baht," said the U.S.
bank trader. With Thailand's current account surplus now running
at around $700 million per month, the influx of U.S. dollars into
the Bangkok market will support the baht, near its current level,
he said.

Towards the end of Asian trading on Friday the U.S. dollar was
quoted at 41.7550 baht, up from 41.4350 baht the day before and
above 41.4550 a week earlier.

The baht is not the only Asian regional currency to find
support from a ballooning current account surplus.

At the close of trading on Friday the U.S. dollar was quoted
at 1,315 won, up a touch from 1,307 won at Thursday's close, but
well below 1,356.50 won late the previous Friday.

Although the Korean currency's rally may continue over the
short term, there are few won bulls to be found in the foreign
exchange market, as most participants argue that Korea's weak
economic fundamentals will reassert their baleful influence soon.

Among other Asian regional currencies, the rupiah rose a touch
yesterday, although it still ended the week lower against the
U.S. dollar. The Philippine peso and the new Taiwan dollar were
both sold off to finish the day and the week down.

Late on Friday the U.S. currency was quoted at 15,025 rupiah,
down from 15,200 the day before, but well above 14,375 a week
earlier.

Against the Philippine peso the U.S. currency ended at 42.01
pesos in the domestic market, up from 41.54 peso at Thursday's
close and 41.37 peso a week before.

Despite central bank intervention late in day, the U.S. dollar
also ended up against the Taiwanese currency, finishing at
NT$34.402, up from NT$34.388 the previous day and NT34.382 a week
earlier.