Southeast Asian currencies down on U.S. dollar rally

Southeast Asian currencies down on U.S. dollar rally

SINGAPORE (Dow Jones): Southeast Asian currencies finished
Asian trading hours on Tuesday marginally lower against the U.S.
dollar, as the U.S. currency once again nosed above Y135 to the
Japanese yen.

The Singapore dollar, the Thai baht and the Philippine peso
all slipped in line with the Japanese currency, while in North
Asia both the won and the new Taiwan dollar fell against the U.S.
dollar.

Although it too ended the day down a touch after falling back
late in the day, the rupiah proved more resilient than other
regional currencies. Despite firm official denials, including one
last week from Indonesia's President Habibie, rumors of impending
controls continue to swirl in the foreign exchange market,
supporting the local currency.

Late in Asian trading, the U.S. dollar was quoted at 10,088
rupiah, up slightly from 11,000 rupiah late the previous day.

Foreign exchange players also proved reluctant to dip into the
Singapore dollar market, according to traders.

"At this point in time I don't have anyone calling me on the
Singapore dollar. I haven't seen or heard of any customers coming
in to the market to do anything," said one trader at a U.S. bank
in the republic.

With the Monetary Authority of Singapore widely believed to
stand ready to support the U.S. dollar at S$1.7150, while at the
same time looking to check any rapid rises to levels around
S$1.7700 to S$1.7780, dealers complain there are scant rewards
available for those prepared to risk their capital by taking
positions.

"People are just trading the range," said Wee at Standard
Chartered. "They are looking to buy the U.S. dollar on dips to
S$1.7150 and bring it back up."

Late in Asian dealing on Tuesday, the U.S. dollar was quoted
at S$1.7350, up from S$1.7296 at the same time the day before.
"September was the month Malaysia imposed capital controls, so we
will have to wait for the September data to see the effect on
bilateral trade."

Upturn

And whatever short-term boost the upturn in exports may have
produced, said traders, has been more than outweighed by the
market's nervousness over the potential impact on Singapore of
escalating political tension in neighboring Malaysia following
the arrest Sunday of former Finance Minister Anwar Ibrahim.

In a press conference on Tuesday, Prime Minister Mahathir
Mohamad confirmed that his one-time deputy will be charged with
sodomy, an offense under Malaysian law.

Anwar's supporters maintain that the charges against the
former minister are fabrications designed by political opponents
to discredit him.

Other Southeast Asian currencies also closed lower on Tuesday.
Although remaining tightly range-bound, the baht slipped back,
with the U.S. dollar rising to end Asian hours at 40.6550, up a
fraction from 40.6150 at Monday's close.

The Philippine peso dropped too, as concern about the
potential impact on the Philippine banking sector of the
impending closure of the heavily indebted Philippine Airlines
continued to undermine the currency. At the close of dealing on
the Philippine Dealing System, the U.S. dollar was quoted at
44.375, up from 44.290 at Monday's close.

In North Asia, the won subsided further as banks and
corporations continued to chase U.S. dollars in the run-up to
large scale foreign currency debt maturities falling over the
coming weeks.

At the end of domestic trading the U.S. dollar was quoted at
1,400 won, up from 1,392.50 the previous day.

Meanwhile in Taipei, the new Taiwan dollar dropped against the
U.S. dollar, in parallel with the fall of the yen. At the close
of domestic trading the U.S. dollar was quoted at NT$34.572, up
from NT$34.526 at Monday's close.