SE Asian currencies drift sideways

SE Asian currencies drift sideways

SINGAPORE (Dow Jones): Trading interest in regional foreign- exchange markets evaporated Wednesday, leaving Southeast Asian currencies free to drift sideways against the U.S. dollar for most of the day.

North Asian markets also saw little price action, as most participants sat on their hands, awaiting fresh news.

"People are still very defensive as far as taking positions goes," complained a trader at a U.S. bank in Singapore.

Volatility earlier in the week sparked by rumors, vehemently denied by officials, that China may devalue its currency, flushed many participants out of their positions in regional currency markets.

Now, nervous of further price swings and reluctant to take new risks onto their books ahead of next month's Lunar New Year holidays, traders are hanging back from the market.

Observers warned, however, that market-moving news could still emerge from Malaysia, a country that has dropped off many traders' radar screens in recent months.

"The talk is that there may be a revaluation of the ringgit," said the regional foreign-exchange and interest-rate strategist at a U.S. investment bank, asking not to be named.

The strategist, however, is unsure if a revision of the ringgit's exchange rate would really have much impact.

"Whether any re-marking of the ringgit would see the Singapore dollar at S$1.66 (to the U.S. dollar) is unclear, but I suspect it wouldn't," he said.

Late Wednesday, in the spot foreign-exchange market, the U.S. dollar was quoted at S$1.6855, marginally higher than S$1.6830 late the day before.

Elsewhere in Southeast Asia, the U.S. dollar was bid up against the rupiah, as sentiment toward the Indonesian currency sagged in the face of continuing unrest in provincial cities and dollar-buying from Indonesian companies.

Late in Asian dealing, the U.S. dollar was quoted at Rp 9,240, up from Rp 9,100 toward the end of Asian trading Tuesday.

The U.S. currency also firmed slightly against the Thai baht late in Asian trading, in parallel with a rally against the yen, climbing to 36.7650 baht, from 36.6800 baht Tuesday.

The U.S dollar also ended a touch higher on the Philippine Dealing System, rising against the peso, to finish at 38.570 pesos, up from 38.470 at Tuesday's close.

In North Asian markets, trading was subdued Wednesday, with the U.S. currency ending nearly flat against both the New Taiwan dollar and the South Korean won.

Against the Taiwan currency, the U.S. dollar closed at NT$32.291, compared with NT$32.295 the day before.

Against the won, the U.S. dollar ended local trading at 1,175 won, barely changed from 1,176 won at Tuesday's close.