SE Asian currencies sidelined as focus shifts

SE Asian currencies sidelined as focus shifts

SINGAPORE (Dow Jones): The Singapore dollar moved in line with the sharp fluctuations of the yen against the U.S. dollar Friday, as the greenback swung in a five-yen range in intraday trading.

The other, largely illiquid Southeast Asian currencies have been relegated to the sidelines while traders focus on major currencies, dealers said.

Even mounting fears that Wall Street could continue falling after a 250-point drop Thursday - especially as the Nikkei 225 Index followed suit by dropping more than 745 points, or 5 percent, to close at 13,916 - failed to propel regional currencies in any discernible direction.

The U.S. dollar sank to 131.03 Japanese yen from 133.81 yen late Thursday.

In late Asian trading, the U.S. dollar was trading at $1.7252, down from S$1.7329 in early trading Friday and S$1.7327 in late Asian trading Thursday. It had brushed as low as S$1.72 early in the Asian session, then rebounded almost to about S$1.7300 before falling again.

The Singapore dollar is tracing the yen closely," said Jean Wee, an analyst with Sanwa Bank in Singapore, adding that the recent capital and currency controls implemented by Malaysia would likely be detrimental to Singapore.

She expects the U.S. dollar to push as high as S$1.80, although a strengthening yen could drive the greenback as low as S$1.70.

The U.S. dollar was trading at Rp 11,775, up slightly from Rp 11,600 in late Asian trading Thursday. The moribund currency has been gradually slipping against the U.S. dollar, traders said, as the market anxiously watches mounting civil unrest in the streets of Jakarta and provincial towns.

"People are squaring what positions they might have as the weekend approaches," said a trader at a U.S. bank.

The Thai baht (THB), traders said, has also been trading within a tight range, although market watchers are focusing on Japanese banks and corporations that are approaching the year-end reporting period.

"If the yen moves a lot in coming weeks, it could affect the baht, as Japanese companies unwind baht swap positions, which could leave the market flush with baht," said a trader at a Singapore bank. "The Japanese need to repatriate the yen to prop up their balance sheets back home."

The U.S. dollar is trading at 40.75 baht, unchanged from late trading in Asia Thursday. "An off day today," said the trader at the Thai bank, explaining that the baht has recently been acting as a secondary proxy for regional currencies - behind the Singapore dollar.

"The baht is holding up well in view of the yen," said Wee from Sanwa Bank. "This could be the start of a decoupling with the yen."

While Southeast Asia languishes, North Asian currencies - by way of forwards and non-deliverable forwards contracts - have seen a resurgence, economists said.

Wee said the South Korean won is experiencing increased importer buying. "After nine months of not buying, inventories have been run down, so some restocking - raw materials and capital goods - is taking place," she said.

Late Friday in Asia, the U.S. dollar is trading at 1,366 won, almost unchanged from 1,363 won in late trading Thursday.

The U.S. dollar is trading at HK$7.7480, stronger than HK$7.7405 recorded late Thursday, as the market focuses on the Hong Kong Monetary Authority's efforts to jack up overnight rates above 4 percent to keep a respectable premium to U.S. interest rates in place.

The U.S. dollar was also trading at 43.710 peso, down slightly from 43.80 peso in late trading Thursday, as analysts and traders turn an increasingly skeptical eye toward the Philippine economy.

The U.S. dollar was also trading at NT$34.445, well down from NT$34.546 in late trading Thursday, as the currency tracked the yen as it strengthened against the U.S. dollar.

Other dollar rates compared with late Thursday included: 1.6904 German marks, down from 1.6911; 1.3878 Swiss francs, down from 1.3892; 5.6677 French francs, down from 5.6702; 1.9074 Dutch guilders, down from 1.9079; 1,669.60 Italian lira, up from 1,669.48, and 1.5110 Canadian dollars, down from 1.5131.

The British pound was quoted at $1.6826, up from $1.6794.