SE Asian currencies slide in thin trading

SE Asian currencies slide in thin trading

SINGAPORE (Dow Jones): The seemingly unstoppable slide of the yen dragged most Southeast Asian currencies lower yesterday.

Even with transaction volumes greatly diminished by the closure of trading rooms in Singapore for a public holiday marking Sunday's National Day, there was little support for the regional currencies. After the U.S. currency broke upward through key resistance levels against the ringgit and the Singapore dollar in New York trading hours on Friday, the dollar maintained its upward trend throughout Asian hours on Monday, ending higher across the board, despite some profit-taking.

Of Southeast Asian currencies, only the baht held its own against the U.S. dollar, boosted, said traders, by market participants selling U.S. dollars to book profits from short positions in the local currency.

The Japanese yen was under pressure yesterday with investors disappointed by Prime Minister Keizo Obuchi's policy speech last week, dealers said.

The Japanese unit plunged to as low as 146.53, the lowest level against the dollar since mid-June, in early afternoon trading.

In a late trading, the Japanese yen traded at 146.41.

The yen's fall amid market disappointment in the economic program of Japanese prime minister Keizo Obuchi helped the U.S. dollar to break above psychological resistance at S$1.7500 and 4.0000 ringgit late Friday.

Although brokers in Singapore reported good interest to take profits from the U.S. dollar's run-up, the U.S. currency maintained its level against the Singapore dollar through Asian hours on Monday, dropping back only slightly from early highs to trade at S$1.7520 in late trading yesterday. Late Friday in Asia, the U.S. currency was at S$1.7455.

Against the ringgit, the U.S. dollar continued its bull run after Bank Negara trimmed 50 basis points off its three-month money market rate. The second cut in as many weeks, the move, which lowered the central bank's intervention rate to 10 percent from 10.50 percent, had been widely expected.

Nevertheless, the rate cut did nothing to improve ringgit sentiment, already severely damaged by Friday's rumors - strenuously denied by authorities in Kuala Lumpur - of riots in the capital. By late afternoon trading, the U.S. dollar had risen to 4.2250 ringgit , up from 4.1800 ringgit late Friday.

In marked contrast to Bank Negara, the Central Bank of the Philippines jacked up its key overnight borrowing rate by two percentage points to 15 percent from 13 percent, in an attempt to support the plunging peso.

The move, which comes into effect on Tuesday was at least partly successful. After hitting a high of 44.790 pesos on the Philippine Dealing System, the U.S. currency dropped back after the announcement of the rate hike to trade at 44.100 pesos, up from PHP43.490 at Friday's close.

Elsewhere in the region, the rupiah also fell, with the dollar rising to 13,000 rupiah, up from 12,750 rupiah late Friday.

The Thai baht, however, appreciated against the U.S. dollar, propelled higher, said traders, as market participants sold the U.S. currency to take profits after the dollar last week broke up through 42.00 baht.

In afternoon trading in Asia, the dollar was quoted at 41.7250 baht, down from 41.9550 baht toward Friday's Asian close.

In North Asia, a lessening of the speculative pressure, which last week battered the Hong Kong dollar's fixed link to the U.S. dollar, sending interest rates sharply higher, provided little respite for the won or the New Taiwan dollar.

By late in Asian trading, the benchmark three-month Hibor rate had slipped back to 11 percent from 12.75 percent late in Asia Friday.

At the same time however, the yen's fall undermined the South Korean currency, against which the U.S. dollar finished domestic trading at 1,338 won, up from 1,326 won.

Meanwhile, heavy central bank intervention failed to support the New Taiwan dollar, which dropped to a six-week low against the U.S. currency. Despite U.S. dollar sales estimated to amount to $100 million, at the close of domestic trading the U.S. dollar was quoted at NT$34.781, up from NT$34.60 late Friday.