SE Asian currencies edge higher against dollar

SE Asian currencies edge higher against dollar

SINGAPORE (Dow Jones): Southeast Asian currencies edged at touch higher against the U.S. dollar during thin Asian trading yesterday.

With many traders returning to their desks after a long weekend, and markets in Tokyo and London closed for public holidays, trading activity was lethargic at best.

Attention, such as it was, centered on the baht, which dropped in early trading as the market awaited the resignations of the governor of the bank of Thailand, Chaiyawat Wibulswasdi, and several of his top assistants.

The Thai currency recovered its losses later in the day, however, as market participants in Hong Kong bought up the baht anticipating that the currency will strengthen further in reaction to the kingdom's forthcoming issue of a jumbo Yankee bond.

Activity in other regional currency markets was subdued. After strengthening during thin holiday trading on Friday, the ringgit was maintained above a key support level, despite the credit rating downgrade of Tenaga Nasional, a key Malaysian blue chip company whose paper is widely regarded as a proxy for Malaysian sovereign debt.

As the ringgit ended higher, so did the Singapore dollar, while the Indonesian rupiah also inched up against the U.S. currency.

Although hefty increases in fuel prices announced yesterday are thought likely to further exacerbate violent anti-government demonstrations across Indonesia, risk-prone investors continue to chase the sky-high yields on rupiah-dominated short-term paper, said traders.

Late in Asian trading, the U.S. dollar was quoted at Rp 7,975 rupiah, down from Rp 8,085 late on Thursday.

With Bank Indonesia thought ready to raise short-term interest rates higher still - as high as 80 percent according to some pundits - many players see the rupiah appreciating further.

"If Indonesia were to hike interest rates again, foreign investors would be pretty keen to pick up the yield on bank Indonesia's short-term paper," said Thio at Paribas.

"Given that the worst is behind as far as uncertainty on compliance with the IMF goes, Indonesia's country risk has lessened somewhat, funds with the right sort of risk profile would definitely be (attractive)," she said.

Thio added, however, that the government's target exchange rate appears unrealistic in the short term, saying: "Rp 7,000 will be the dollar's (rate) for now."

Meanwhile on the Philippine Dealing System the peso rose as market participants trimmed long U.S. dollar positions assumed in advance of the Philippines' national election in a week's time.

The U.S. dollar fell to end trading at 39.41 pesos, down from 40.20 pesos at Thursday's close.

In North Asian markets both the new Taiwan dollar and the won eased back against the U.S. currency.

Against the Taiwanese currency the dollar ended at NT$33.008, up from NT$32.970. Against the won, the U.S. currency closed at 1,347 won, up from 1,336 won.