Soft dollar helps poor Asian currencies

Soft dollar helps poor Asian currencies

SINGAPORE (Reuters): Asian currencies firmed on the back of a
lower U.S. dollar on Thursday as activity dwindled to commercial
flows after the previous day's sharp falls caught many interbank
traders short of dollars.

Dealers said the dollar's drop to three-month lows against the
yen overnight kept Asian currencies on relatively firm footing,
but they showed little inclination to revisit recent highs.

"The stronger yen should enable Japanese companies, that have
been providing funds to Asian countries, to roll over their
debts," the head of regional currencies trading at a European
bank in Singapore said.

"But the interest is more on demand and supply today. There's
not much interbank activity going on because some players were
hurt by yesterday's moves," he said.

The Thai baht's abrupt drop late on Wednesday from highs near
46.00 to the dollar triggered falls in other Southeast Asian
currencies, which had been climbing steadily this week after
Bangkok scrapped a two-tier trading system and Indonesia took
steps to address its corporate debt problems.

Dealers attributed the baht's fall to a range of factors
including fears about King Bhumibol Adulyadej's health and a huge
Thai corporate order for dollars to settle debt payments.

"Local Thai companies had to buy about $300 million for a loan
redemption and the market was short. U.S. funds joined in the
selling when the dollar broke 49.00 and that exacerbated the
baht's fall," the dealer said.

The baht firmed back above the 50 per dollar level on Thursday
as concerns about the king eased after he appeared on television
on Wednesday night.

But dealers said dollar demand from U.S. and Thai names would
block its rise near the 47.50 level to the dollar.

The Indonesian rupiah hovered below the 9,000 per dollar
level, but dealers said fears of central bank intervention would
limit its falls to 10,000 for the time being.

The Malaysian ringgit remained above 4.00 to the dollar for
most of the day after recovering in overseas markets on comments
by Finance Minister Anwar Ibrahim.

The Singapore dollar nudged higher in late trade after the
Thai Bankers' Association said it favored using the Singapore
dollar as common currency for trading within the Association of
Southeast Asian Nations (ASEAN).

The Philippine peso ceded some ground to importer demand for
dollars around the 40 level, while portfolio flows to the stock
market fizzled out.

The Taiwan dollar finished higher for the fourth straight day,
gaining from the yen's rise and expected foreign inflows to the
stock market.

Taiwan's stock index has risen 6.64 percent since Monday,
Foreign funds bought a net T$3.7 billion worth of Taipei stocks
on Wednesday.

The Hong Kong dollar was steady but dealers cited fears of
rising interest rates amid indications players were beginning to
take long-term short positions in the currency.