Sleepy Asian currencies hold up with Japan's yen

Sleepy Asian currencies hold up with Japan's yen

SINGAPORE (Reuters): Asian currencies held up in listless
trade yesterday as the yen's resilience provided the only point
of interest in a market largely starved of fresh leads.

Dealers said most regional units continued to benefit from the
strong yen but their failure to rise further in the face of
demand for cheap dollars cast doubt on the sustainability of
recent gains.

"The view that the Asian currency rally has ended in the first
quarter and the second quarter will see a weakening bias is
supported by the widening in risk premiums," said Banque Paribas
strategist Thio Chin Loo.

"Swap yields have risen across the board, notably in Malaysia,
Indonesia and Thailand," she said in a daily report.

The Indonesian rupiah firmed slightly after the central bank
raised its rupiah deposit rates by four percentage points.

Dealers said the market had little reaction to Bank Indonesia
governor Sjahril Sabirin's overnight comment that he did not see
another interest rate hike in the near term.

Sabirin said Bank Indonesia was following a dual policy to
strengthen the rupiah -- through interest rates and economic
reform measures to boost confidence.

He also said fair value for the rupiah was at 5,000-6,000 to
the dollar and he saw the Indonesian economy starting to rebound
in the first quarter of next year.

In Thailand, the baht breached the 39 barrier to the dollar in
late trade on continuing offshore demand after Bangkok Bank
announced the details of its new share issue overnight.

Thailand's top bank raised more than $1 billion on Thursday
with the 440 million new share offering.

Offshore demand for the baht to invest in the shares was
expected to keep the Thai unit buoyed, with some dealers saying
the Government of Singapore Investment Corp (GSIC) had been an
active buyer of baht in recent sessions.

A GSIC spokeswoman declined to comment on the rumors.

The Thai Labor Ministry said the number of unemployed had
jumped to 2.03 million, exceeding end-year projections, from 1.8
million at the end of 1997.

In South Korea, the won benefited from larger than expected
export deals and the yen's strength despite central bank governor
Chon Chol-hwan's comment about lowering interest rates.

"If the stability in the foreign exchange market continues,
(the central bank) plans to lower market rates," Chon said.

New York Federal Reserve president William McDonough told a
press conference in Seoul that lowering interest rates was a
delicate issue at this early stage of South Korea's economic
crisis.

Earlier, the finance ministry withdrew remarks from the text
of a speech by Finance Minister Lee Kyu-sung in which he said
lower rates were urgently needed no later than May.

The Malaysian ringgit faltered after failing to climb far
despite the stock market's rally on Wednesday's news of the
merger between RHB Bank and Sime Bank.

Dealers said interest was dampened by news Bank Negara
Malaysia would provide a 12-month guarantee against unforeseen
liabilities of Sime Bank.

"The inability of the ringgit to strengthen reflects investor
concern over the Malaysian banking industry as a whole," said
Paribas' Thio.

But dealers said fears of central bank intervention were
keeping the ringgit propped up above 3.80 to the dollar.

The Philippine peso was weak but off the day's low after a
slow day, with most dealers leaving early for a weekend
convention.

The Hong Kong dollar was steady while forwards firmed slightly
after the Hong Kong Association of Banks said it was leaving
deposit rates unchanged.

Hong Kong's February retail sales fell 18 percent in value on
the year and 26 percent on the month.

The Taiwan dollar held above the T$33 level to the U.S. dollar
on the yen's strength, with the market showing no reaction to
news of a slight drop in the central bank's foreign reserves.

Taiwan's central bank said foreign reserves fell to US$83.615
billion at end March from $84.011 billion at end February.
Dealers said the fall could be partly due to the central bank's
quiet defense of the Taiwan dollar.

The central bank also said broad M2 money supply grew 8.13
percent year-on-year in March after rising 8.51 percent in
February.