SE Asian monies move higher

SE Asian monies move higher

SINGAPORE (Dow Jones): Southeast Asian currencies generally moved higher against the U.S. dollar on Thursday, as traders took advantage of a lackluster dollar-yen market to take profit by selling the dollar against regional currencies.

With Japan sidelined because of a public holiday, a lackadaisical Asian trading session came to life as the Singapore dollar, Thai baht and Philippine peso climbed against the dollar.

The Indonesian rupiah and new Taiwan dollar remained generally flat while the South Korean won recorded a slight gain.

Traders said the short-lived bullishness in regional currencies could be ascribed to dollar profit-taking before long U.S. dollar positions emerge once again.

Daniel Lian, head of Asian markets research at ANZ Bank in Singapore, said the dollar should eventually climb to Y123 in coming weeks as the Bank of Japan is finally forced to underwrite ailing Japanese government bonds, "paving the way for a more solid increase in money supply in the future and accelerate the depreciation of the yen in the process."

In late trading, the U.S. dollar was trading at S$1.6875, well down from S$1.6947 in late Asian trading Wednesday.

"The Singapore dollar is tracking the yen, as there is a squaring of positions ahead of Chinese new year," said a trader at a U.S. bank in Singapore. He noted that as the U.S. dollar once again head down through Y114, investors had started selling the U.S. currency against regional currencies. "There were also some stop-loss orders at S$1.69, which pushed it down a touch further."

Clifford Tan, foreign exchange and interest rate strategist at Warburg Dillon Read in Singapore, said in the longer term, the U.S. dollar should climb to S$1.80, as bleak economic news and mild deflationary pressures batter the republic.

"And if leading exports start to falter - such as the electronics sector losing market share in the U.S. - then we could see further weakening," he said.

The U.S. dollar was also trading on the Philippine Dealing System at 38.53 pesos, well down from 38.98 pesos late on Wednesday.

There had been expectations in the market that the dollar would be quite volatile against the peso Thursday because a number of non-deliverable contracts came due, traders said. Instead, the U.S. dollar simply slipped, they said.

"We had been expecting a huge inflow of U.S. dollars, but it didn't really come about - just odd-lot U.S. dollar selling as the yen climbed, which pushed the peso higher," said a trader at a U.S. bank in Singapore.

The dollar was also trading at 36.940 baht, down from 37.0300 baht late Wednesday.

Traders said the dollar moved in a tight range during the session, trading higher in the morning as offshore buying pushed the dollar to 37.090 baht and moving lower as onshore dollar selling pushed the currency as low as 36.930 baht.

Economists said investors will be inspired by news that Thailand's parliament passed the final reading of a key piece of economic legislation that will facilitate the foreclosure of failed companies' assets. However, key bankruptcy reform bills have yet to be passed by the country's senate.

The dollar was also trading at 8,675 rupiah, almost unchanged from 8,625 rupiah late Wednesday. Bank Indonesia governor Sjahril Sabirin said Thursday that interest rates would be kept firm until the rupiah appears less vulnerable.

In north Asia, the dollar was trading at 1,175.2 won, down a touch from 1,177.4 won late Wednesday. The U.S. currency was also trading at 32.285 new Taiwan dollars, little changed from NT$32.280 late Wednesday.