Southeast Asian currencies down in thin trading

Southeast Asian currencies down in thin trading

SINGAPORE (Dow Jones): Southeast Asian currencies fell in
thin, range-bound trading yesterday, unable to take much
direction from the Japanese yen with Tokyo out on holiday.

Despite the release of an unexpectedly good June non-oil
exports number, the Singapore dollar led regional currencies
lower.

"Most people were caught by surprise," said one trader at a
Japanese bank in Singapore.

"Traders were caught long U.S. dollars on the higher end, and
the dollar came down quite fast after the number was reported,"
he said. The trader added that continuing bearish rumors then
pushed the U.S. dollar up against the Singapore dollar once
again.

One rumor making the rounds out of London is that the Sultan
of Brunei had asked the Bank of England to help him track down
millions of dollars missing from state and family coffers in the
Sultanate. Brunei maintains a one-for-one exchange rate between
the Brunei dollar and the Singapore dollar.

A trader at a British bank said rumors that the Monetary
Authority of Singapore would devalue the currency, first heard
over the weekend in New York, were still weighing on the
Singapore dollar in the afternoon

"It is extremely unlikely (that the MAS would devalue), but
the rumor is out there in the market," he said.

In late Asian trading, the U.S. dollar is quoted at S$1.7005,
up from S$1.6925 late on Friday.

A trader at a French bank in Singapore said the Singapore
dollar may have a bit more room to strengthen.

"The market is still long, so the U.S. dollar may come a bit
lower to S$1.6900," the trader said.

Winston Koh, market strategist for JP Morgan in Singapore,
said trading in regional currencies is likely to remain thin
until Japan picks a new leader on Friday.

Prime Minister Ryutaro Hashimoto resigned last week to take
responsibility for the ruling party's losses in elections to the
upper house of Parliament, and a new leader is expected to be
chosen Friday.

People are still taking a wait-and-see attitude towards
elections in Japan," Koh said. "Few are inclined to take
aggressive positions in the regional currencies."

Koh said that, over the medium term, weakness in the regional
currencies is more likely than strength, based on fundamentals in
Southeast Asian economies.

"If the new government in Japan doesn't act quickly, Asian
currencies will weaken. If it does act, Asian currencies may not
weaken as fast, but the trend is for some weakness due to
fundamentals," Koh said.

In late Asian trading,, the U.S. dollar was quoted at 4.1200
ringgit, up from 4.0925 ringgit late trading Friday.

The Thai baht strengthened late in Asian trading Monday,
tracking the Singapore dollar, dealers said. The greenback is
quoted at 40.9650 baht, down from 41.1250 baht late Friday in
Asia.

On the Philippine Dealing System, the peso gained against the
dollar in line with the baht. The U.S. dollar finished the day at
41.845 pesos, down from 42.360 pesos at close of business on
Friday.

The Indonesian rupiah ended a volatile yesterday little
against the dollar reaching almost 14,450 rupiah, compared with
13,350 late on Friday.

"The rupiah is driven by very thin flows in the market," said
JP Morgan's Winston Koh. "Dollar sales seen last week by
Indonesian banks has eased, so the rupiah is going back to where
it was before."