SE Asian currencies ease back on flat stock prices

SE Asian currencies ease back on flat stock prices

SINGAPORE (Dow Jones): Southeast Asian currencies eased back
against the U.S. dollar on Wednesday as a fall in the yen and
profit-taking on local equities dampened sentiment towards
regional foreign exchange markets.

The sole exception to the general trend was the South Korean
won, which ended fractionally higher against the U.S. dollar,
despite dwindling fund inflows into the local stock market.

In contrast to the excitement of last week's regional currency
rally, which carried over into the early part of this week,
activity was subdued across Asia, traders complained.

"The sort of markets we're seeing these days are either full-
on, or there's nothing at all. This was one of the nothing at all
days," commented Andrew Fung, a treasury economist at Standard
Chartered Bank in Singapore.

Among the few regional currencies to show a sizable move was
the Thai baht, which dipped steeply against the U.S. dollar in
early trading.

Although foreign investor sentiment towards Thailand remains
positive, Thai players were less optimistic, bidding the U.S.
currency up above the 37.50 baht for the first time this week.

Towards the end of interbank trading hours in Asia, the U.S.
dollar had been pushed up to 37.5100 baht, from 37.3950 baht late
the previous day.

Should the Bangkok stock market continue falling, following a
0.9 percent dip on Wednesday and a 1.5 percent drop the previous
day, the U.S. currency is likely to retest the 37.5500 level in
the immediate future, said the head of foreign exchange trading
at a Thai bank.

Sliding stock prices also whittled away at the Philippine
peso's recent gains, as the Manila stock market slipped by nearly
2 percent on Wednesday.

At the close of local trading, the U.S. dollar was at 38.070
pesos, well down from its earlier intraday high of 38.180 pesos,
but up a fraction from 38.050 pesos at Tuesday's close.

The Singapore dollar also ended a fraction lower, despite a
modest upturn in local stocks after Tuesday's fall.

For the time being the U.S. currency is trapped in an
extremely tight S$1.7100 to S$1.7150 range, supported by fears of
potential local monetary authority buying below S$1.7100, and
capped by investment banks sales towards S$1.7150.

Should the U.S. dollar strengthen further against the yen,
however, convincingly clearing the Y119.00 level, then a test of
S$1.7150 is likely, warn dealers.

Late Wednesday in Asia the U.S. dollar was at S$1.7112, up
marginally from S$1.7110 at the same time the previous day.

Against the Indonesian rupiah, the U.S. dollar ended Asian
trading at Rp 8,665, little changed from Rp 8,860 the day before.

After climbing earlier in the week, Wednesday saw the new
Taiwan dollar give back some ground on abated trading volumes. A
weaker yen and softer stock prices contributed to the local
currency's fall, as the U.S. climbed to close at NT$32.775, up
from NT$32.742 on Tuesday.

The South Korean won, however, succeeded in ending a touch
higher despite a stock market sell off. The local currency
struggled to maintain its bullish tone, however, following
reports that a senior central bank official had talked down the
likelihood of further interest rate cuts, saying that the rapid
decline in rates this year had distorted both the equity and
foreign exchange market.

Recent interest rate reductions have sparked a 36 percent
rally in the local stock market over the year to date, sucking in
foreign investment funds, which have helped lift the won by
around 5 percent from its early March low against the U.S.
dollar.

At Wednesday's close the U.S. dollar was at 1,188.20 won, down
slightly from 1,190.00 won the previous day.