SE Asian monies feel effects of yen

SE Asian monies feel effects of yen

SINGAPORE (Dow Jones): Southeast Asian currencies started to slip in earnest against a surging U.S. dollar in late trading on Friday, playing catch-up to the yen's continued slide against the U.S. currency this week, traders and economists said.

At 0900 GMT (4:00 a.m. EST), the U.S. dollar was trading at Y120.06, up from Y118.85 in late Asian trading Thursday and markedly higher than Y114.54 last Friday in Asia.

The U.S. dollar did manage to climb overnight to a 10-week high of Y120.70 before slipping back on moderate profit-taking, traders said.

With most Asian markets re-opening today or Monday following Lunar New Year celebrations this week, currency strategists expect many sluggish regional currencies to be sold down in line with the yen's faltering levels.

"Most market players will be back in full force next week after the Chinese New Year and that's when I expect the U.S. dollar to move markedly higher against regionals - to play catch- up," said a currency strategist at a European bank in Singapore.

At 0900 GMT, the U.S. dollar was trading at S$1.7075, well up from S$1.6980 late Thursday and S$1.6920 in late Asian trading a week ago.

Jimmy Koh, a regional economist at Idea in Singapore, expects U.S. dollar-buying to gain momentum next week, now that the key resistance level at S$1.70 has been breached.

"The (U.S.) dollar should be heading above S$1.72 very soon," he said, noting that a weaker domestic currency is advantageous to the republic's flagging economy, which is now grappling with deflationary pressures.

The U.S . dollar was also trading at 37.5250 baht, well up from 36.93 baht late Thursday and 36.9750 baht last Friday.

Thio said the baht - like most other regional currencies - is mirroring yen weakness, while "a break of key resistance at 37.30 baht (means) the next target is at 38 baht (against the U.S. dollar)."

A number of economists and currency strategists are calling for gradual trade-weighted depreciation of regional currencies, including the baht, in line with a stronger dollar-yen.

"If regional currencies move in line with dollar strength - as is the case - then central banks will not be too concerned," said Thio at Paribas.

The U.S. dollar was also trading at 8,850 rupiah, up from 8,775 rupiah late Thursday and 8,675 rupiah last Friday.

On the Philippine Dealing System, the U.S. dollar was trading at 38.920 pesos, well up from 38.66 pesos late Thursday and 38.565 pesos last Friday.

"The peso is mirroring the fall in the yen and not much more; when the yen weakens, the market tends to go long (on U.S. dollars)," said a trader at a U.S. bank in Manila, which will have a half-day holiday Monday as the nation commemorates the 1986 People Power Revolution that ousted former dictator Ferdinand Marcos.

In North Asia, the U.S. dollar was trading at 1,203.7 won, well up from 1,181.8 won late Thursday and 1,175.7 won last Friday. Traders said the won could hit 1,250 won against the U.S. dollar if the latter continues to strengthen against the yen.

The U.S. dollar was also trading at 32.507 New Taiwan dollars, up from NT$32.278 late Thursday and NT$32.278 last Friday.