SE Asian currencies mixed against dollar

SE Asian currencies mixed against dollar

SINGAPORE (Dow Jones): Southeast Asian currencies were mixed,
but with a firm tone against the U.S. dollar in quiet trading
late Monday, even as the yen slowly weakened throughout the
session.

"The positive and close correlation between the yen and
regional currencies has weakened somewhat in the past week," said
Daniel Lian, head of Asian markets research at ANZ Bank in
Singapore. "Asian currencies should continue to maintain their
firm levels."

At 09:00 GMT (4:00 a.m. EST), the U.S. dollar was trading at
123.74 yen, up from 122.82 in late Asian trading Friday.

Traders and economists ascribed the de-coupling to a general
lack of interest in taking on new risk, especially in emerging
markets, while year-end book closing and squaring of positions
have become the order of the trading day.

"The (U.S.) dollar-yen, dollar-mark is still fairly active,
and the regionals will move accordingly, although we see more and
more of a lag time in response," said a trader at a Thai bank in
Singapore.

"Asian currencies are not necessarily reverting back to their
earlier behavior of blindly tracking dollar-yen," said a treasury
economist at Standard Chartered Bank in Singapore.

He added that currencies such as the Thai baht and Philippine
peso should be able to hold on to recent gains even if mild yen
weakness persists.

"Institutions are closing down their books but they will
maintain a bias toward Asian currencies and that will give
continued buoyancy to the markets in the region," Lian said.

The U.S. dollar was trading at 39.44 pesos, unchanged from
late Friday. Economists said strong inflows from overseas workers
and the sale of stakes in domestic companies such as Philippine
Long Distance Telephone Co. and San Miguel Corp., would continue
to bolster the country's current and capital accounts.

"It is the improvement in the balance of payments that will
attract the market's interest," one economist said, adding that
last week's announcement that third-quarter gross national
product had grown by 0.8 percent would likely lead to a re-
assessment of the Philippine economy, fueling more capital
inflows.

Thailand has also been benefiting from a market reassessment,
economists said.

The U.S. dollar was trading at 36.0750 baht, down from 36.12
Friday. The U.S. dollar did fall below 36 last week, but traders
expect that another assault on this key resistance level will be
difficult to muster, especially as the Bank of Thailand continues
to dabble in the market.

The central bank's foreign reserves had ballooned $300 million
to more than $28 billion on Nov. 20, according to Standard
Chartered Bank, although "the steady accumulation of reserves
(and paying down of its forward position) does not represent a
more active (foreign exchange) policy."

The U.S. dollar is trading at 7,425 rupiah, little changed
from 7,475 Friday. Ongoing civil unrest doesn't appear to have
affected the rupiah, traders said, which has remained firm and
within a tight range for a number of sessions. The government's
announcement Monday that the economy will contract by roughly
13.4 percent had little effect on the currency.

"The market is limited to onshore, state banks and commercial
orders," said a trader at a U.S. bank in Singapore. "The market
is so thin that I wouldn't be surprised if changing sentiment -
positive or negative, either one - quickly pushed the (U.S.)
dollar below 7,000 or above 8,000."

The U.S. dollar was also trading at S$1.6513, down from
S$1.6542 Friday, after heading south late in the afternoon,
mirroring a decline against the yen.

The U.S. dollar-yen continues to exert its influence on the
U.S. dollar-Singapore dollar in the short term, an economist
said, adding that the Singapore dollar is also popular in the
cross market, because of "rate spread and decoupling from Asian
currencies, especially the peso and won."

"From a trade-competitiveness standpoint, the MAS (Monetary
Authority of Singapore) would probably like to see the (U.S.)
dollar at S$1.68 or so and it will probably head there as the yen
continues to weaken," said a trader at a U.S. investment bank.

In North Asia, the U.S. dollar was trading at 32.429 New
Taiwan dollars, up a touch from NT$32.442 Friday. The U.S.
currency was also trading at 1,245.7 South Korean won, up from
1,241 Friday.