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.