Southeast Asian currencies end mixed

Southeast Asian currencies end mixed

SINGAPORE (Dow Jones): Southeast Asian currencies were mixed against the U.S. dollar in late trade on Friday, after a mid- session surge by the yen to 111.40 against the U.S. currency.

"The dollar was falling until the market heard the Bank of Japan was making inquiries into the market and that was the end of that," as the dollar's slide halted, said a trader at a U.S. bank in Singapore.

In late trading, the U.S. dollar was trading at 111.99 yen, well down from 113.77 yen late Thursday.

While the Singapore dollar, New Taiwan dollar and South Korean won strengthened, the Thai baht and Philippine peso flagged against the U.S dollar. The Indonesian rupiah is generally flat.

The fortunes of the Singapore dollar - slated by many economists to be S$1.75 to S$2 to the U.S. dollar this year - once again looks subject to developments in Malaysia, where a graduated levy of between 0.0 percent and 30 percent on capital repatriation by foreigners has now been introduced.

Malaysia introduced a variety of capital controls and pegged the ringgit at 3.8 ringgit to the U.S. dollar last September.

"As far as anyone knows, the MAS (Monetary Authority of Singapore) treats the ringgit as a regularly tradable currency when calculating its trade-weighted (Singapore) dollar," said Kate O'Donoghue, regional economist at Barclays Capital in Singapore.

Although the Malaysian government has repeatedly said it would not repeg its currency unless regional currencies moved either up or down 20 percent from current levels, the feeling of traders and economists is that any move to float the ringgit this year would see an immediate appreciation of the ringgit.

That would have a negative effect for any investors short Singapore dollars," as the value of the Singapore dollar would appreciate in line with the ringgit, said a trader. However, he believes any ringgit appreciation would be followed by depreciation. "You only have to look at how banks have been forced to lend and how government measures have done nothing to strengthen the financial sector. And despite a fall in interest rates, the economy appears to be stagnant. To get the economy moving again, a weaker ringgit would have to be a goal of the government."

In late trading, the U.S. dollar was trading at S$1.6857, down from S$1.6904 late Thursday, as the republic's currency follows the movement in the yen, traders said.

The U.S. dollar was also trading at Rp 8,720, almost unchanged from 8,700 late Thursday, following Japan's decision to give $2.4 billion to Indonesia from its $30 billion Miyazawa fund for troubled Asian countries.

The U.S. dollar was also trading at 36.73 baht, down a touch from 36.7450 baht late Thursday, with traders once again ascribing the baht's strength to the rise in the yen.

Traders said a lack of fresh news out of Thailand has kept the baht range-bound, despite comments by Thailand's Justice Ministry Thursday that a new bankruptcy court could be up and running by April if the senate gives final approval to relevant legislation next week.

"If the bankruptcy laws and court process proves tenable - something we haven't seen proof of in Indonesia to date- then the fear asset market sell-off people are predicting to happen might not materialize; and future asset auctions may get a better reception," said a currency strategist at a U.S. investment bank in Singapore.

He cautioned that there is little upside in store for the baht because the government is keen to keep its export sector, which has been flagging, buoyant.

The U.S. dollar was also trading at 38.64 pesos, up from 38.53 pesos Thursday. Traders said rumors that poorer-then-expected inflation figures for January damped sentiment for the peso.

In North Asia, the U.S. dollar continued to lose ground to the New Taiwan dollar, trading at NT$32.239, down from NT$32.261 late Thursday.

The U.S. dollar was also trading at 1,170.1 won, down a touch from 1,170.3 won Thursday.