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.