Southeast Asian currencies drift higher as yen surges

Southeast Asian currencies drift higher as yen surges

SINGAPORE (Dow Jones): The U.S. dollar's fall against the yen
in thin Asian trading late on Friday finally pushed sluggish
Southeast Asian currencies higher, traders said.

"The U.S. raids on Iraqi are a non-factor now. Only the lack
of liquidity is managing to drive the market. One or two bank
orders can quickly drive the U.S. dollar higher or lower," said
one trader at a U.S. bank in Singapore.

That happened late in the Asian session when the yen suddenly
spiked, quickly climbing as high as 114.70 yen against the U.S.
dollar from around 116 yen.

The U.S. dollar's sudden drop against the yen roiled regional
currencies, which had been moving sideways during the session,
although there was a noticeable lag in response, traders said.

In a late trading, the U.S. dollar was trading at S$1.6485,
down a touch from S$1.6493 late Thursday and from S$1.6490 last
Friday.

Traders said the correlation between the Singapore dollar and
the yen has waned somewhat during the past month. While the U.S.
dollar falls against yen, the U.S. currency has gradually
appreciated against the Singapore dollar.
" The Monetary Authority of Singapore has been active in the
market, pushing interbank rates down, asking the local banks to
buy U.S. dollars and generally preventing the U.S. dollar from
falling below S$1.60, where it should be if it was tracking the
yen," said the head of foreign exchange at a U.S. bank in
Singapore.

Kate O'Donaghue, an economist at Barclays Capital in
Singapore, said the Singapore dollar should be the MAS's policy
weapon of choice to ensure that Singapore's current recession is
a soft one.

While Singapore languishes, Thailand is looking to get back on
its feet after this week's dismal Financial Restructuring Agency
auction of $10.5 billion in seized assets from 56 defunct
financial institutions.

Only 39 of the 45 tranches were bid for by domestic and
foreign buyers on Tuesday. By Friday, the FRA had accepted the
bidding prices for just nine tranches. The FRA is now trying to
negotiate better prices with the other potential buyers of the 30
remaining tranches -- buyers who had submitted bids ranging from
eight cents to $0.30 on the dollar.

"The FRA is in a quandary. They can't be seen to be disposing
assets at knock-down prices to foreigners, who will then go away
and make big profits. On the other hand, they want to dispose of
the assets," O'Donoghue said.

The peso -- more so than other regional currencies -- seems to
get blown around more by events in the region," said a trader at
a U.S. bank. "If the baht weakens, so does the peso. In the short
term, the movement isn't really related to country fundamentals."

In North Asia, the U.S. dollar was trading at 32.274 New
Taiwan dollars, almost unchanged from NT$32.272 late Thursday and
NT$32.284 last Friday. The U.S. dollar was also trading at 1207.9
won, down from 1,209.3 won Thursday but unchanged from 1,207 last
Friday.