SE Asian monies gain footing in active trading

SE Asian monies gain footing in active trading

SINGAPORE (Dow Jones): Southeast Asian currencies were mostly
stronger against the U.S. dollar in late Asian trading Wednesday
in active dealings, while their North Asian counterparts
languished in line with the weaker yen.

Focus on country-specific developments in Southeast Asia
coupled with the entry of some foreign funds into the region
boosted Southeast Asian currencies Wednesday. The Singapore
dollar, Thai baht and Indonesian rupiah made significant gains
Wednesday.

"We see some genuine funds coming into the Sing dollar and
Thai baht. Some of these funds had gone into the stock markets
(of these countries) in the past two weeks and that caused quite
a sharp run-up. Now, they are coming into the currencies," said
the head of Asian currency dealing at a Japanese bank here.

"The yields on these (Southeast Asian) currencies is also
helping attract some of these funds," he said.

At 0920 GMT (5:20 a.m. EDT), the dollar was at S$1.6215, down
from S$1.6304 in late trading Tuesday. The U.S. dollar was also
at 38.08 baht, down from 38.29 baht late Tuesday. Against the
Indonesian currency, the dollar was at Rp 8,750 compared with Rp
9,025 late Tuesday.

However, North Asian currencies such the Korean won and the
New Taiwan dollar succumbed to selling pressure in line with the
yen's losses against the dollar Wednesday, said dealers. It is
harder for the North Asian currencies to decouple themselves from
the yen because these countries are close competitors to Japan,
said market players.

The Singapore dollar emerged as one of the strongest
currencies in Southeast Asia Wednesday amid continued selling by
investment houses and funds, said market players.

Market players also took notice of some of the positive news
from the Singapore government to bolster the economy, which
helped boost the Singapore dollar, said Derrick Lee, regional
currencies analyst at MCM Asia Pacific.

The government plans to introduce a major business cost-
cutting package in the next few weeks and officials say the city-
state is determined not to let the Singapore dollar go the way of
the regional currencies simply to gain export competitiveness.

Similarly, in Indonesia, the dollar broke the psychological
support level of Rp 9,000 to trade to an intraday low of Rp
8,750. Comments by Bank Indonesia Governor Sjahril Sabirin in
Singapore at the World Economic Forum was the key factor for the
rupiah's rise, said market players.

Bullish sentiment on the Thai baht also helped the currency
gain ground against the U.S. dollar, said market players. They
said Thailand was faithful in sticking to its IMF program and
should be among the first Asian economies to recover from the
current regional slump.

"I think we can see 38 baht to the dollar pretty soon,"
barring any sharp appreciation by the U.S. currency against the
yen, a dealer at a local U.S bank branch said.

Singapore-based market players said they expect the dollar to
fall to baht 37 by the end of the year, while London-based
dealers expect a drop to baht 35.

Bucking the trend, the New Taiwan dollar fell Wednesday for
the third straight day as strong commercial demand for the U.S.
dollar and outflows of foreign equity funds pulled the local
dollar lower, said market players.

In addition, the weakening yen versus the U.S. dollar added to
the selling pressure, they said.

At 0800 GMT (4 a.m. EDT), the U.S. dollar ended higher at
NT$33.277 in onshore trading, from Tuesday's NT$33.119 close, the
third straight rise after nine consecutive declines. The central
bank bought and sold US$150 million Wednesday to smooth some of
the volatility in the market, said traders.

Similarly, the South Korean won ended lower at 1,350 won to
the U.S. dollar, compared with Tuesday's close of 1,347 won.