SE Asian currencies rise on yen's surge

SE Asian currencies rise on yen's surge

SINGAPORE (Dow Jones): Southeast Asian currencies rose across
the board Wednesday on the back of overnight gains in the
Japanese yen.

The yen got a boost more from the political problems of U.S.
President Bill Clinton rather than any good news in Japan,
dealers say. The dollar slipped against other major currencies
after news broke that former White House intern Monica Lewinsky
will testify before a grand jury about her relationship with the
president.

Regional currencies benefited from the dollar's woes, as well,
but the Singapore dollar broke from the pack in morning trading
on strong demand for U.S. dollars. Some dealers implied the
demand came from the city-state's central bank.

An official at the Monetary Authority of Singapore said the
MAS has a policy never to comment on open market operations.

Late in the day, however, the Singapore dollar managed to
strengthen beyond levels seen as Asian trading wound down
Tuesday.

In a late trading, the U.S. dollar was quoted at S$1.7085,
down from S$1.7122 late Tuesday in Asia.

Some talk in the market blamed bearish Singapore dollar
sentiment on Tuesday's news that gross domestic product in the
first half of 1998 had grown only 3.8% over the same period the
year before.

Friedrich Wu, head of economic research for the Development
Bank of Singapore, said it was unlikely that confirmation of a
market expectation will have much affect on the currency going
forward, however.

"There is a possibility - although not a probability - that
economic growth will go into negative territory for the full
year, but it definitely will in the second half, and most likely
in the third and fourth quarter next year, as well," Wu said.

"But these domestic figures should not have much impact on the
currency. I think people have already taken them into account,"
he said, adding that the same generally holds true for other
regional currencies.

"To move the currencies, we have to have some developments
either in Tokyo or Jakarta over the next couple of months," Wu
said.

Political jostling in the midst of a deep recession has cast
the yen adrift over the past several weeks, while currency
dealers in Singapore have been simultaneously apprehensive over
the possibility of further social unrest in Indonesia and hopeful
that international benefactors will come to the rescue with an
injection of capital.

In a late Asian trading, the U.S. dollar was quoted at 13,087
rupiah, down from 13,400 rupiah late Tuesday.

Traders will be watching the annual meeting of the
Consultative Group on Indonesia overnight in Paris. The CGI is a
group of countries that serve as international lenders to
Indonesia.

Some market participants expect that Indonesia will receive
significantly more than the US$5.3 billion the group pledged last
year, and the currency strengthened Tuesday in anticipation.

Callum Henderson, Asian currency economist for Citibank in
Singapore, says any good news for the rupiah could spur gains in
other regional currencies.

"A depressed dollar against the rupiah is a negative factor
for the dollar against the Singapore dollar or the ringgit," he
said. "They do have a pretty strong correlation."

Henderson said market players remain so short regional
currencies that they may need to rise before they can fall again.

"Moody's downgrade of Malaysia last week was not a surprise,
but the extent of it was a shock," Henderson said. Moody's
Investor's Service cut Malaysia's sovereign rating three notches
to Baa2.

"But the market took it relatively in stride. With all the
long dollars it is difficult to make further headway against
regional currencies right now. We may have to see some positions
shaken out before the dollar has the momentum to go higher,"
Henderson said.

In a late trading, the U.S. dollar was quoted at 4.1115
ringgit, down from 4.1250 ringgit late Tuesday.

The Thai baht exhibited similar behavior Wednesday, shrugging
off news that Moody's had put six banks on review for possible
downgrade.

The U.S. dollar was quoted at 40.6550 baht, down from 40.9750
baht Tuesday.