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.