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.