Southeast Asian monies down

Southeast Asian monies down

SINGAPORE (Dow Jones): Southeast Asian currencies have started the Year of the Rabbit on a weaker note on Thursday, after the U.S. dollar pushed dramatically higher against the yen in New York on Tuesday, when many regional markets were shut for Lunar new year celebrations.

At late trading, the dollar was trading at Y118.85, well up from Y114.24 in late Asian trading Monday. Thin market liquidity Thursday kept the dollar range-bound against the yen and regional currencies, traders said, adding that activity would remain muted for the rest of the week, with Taiwan, Hong Kong and China still closed for new year's festivities.

Daniel Lian, head of Asian markets research at ANZ Bank in Singapore, said the Bank of Japan will "ultimately bow to pressure and start underwriting new issuance of JGBs," meaning that the yen will depreciate, perhaps to Y140 to Y150 against the dollar.

"The ultimate impact of such a probable yen move, coupled with no further rate cuts from the (U.S. Federal Reserve), must be pretty negative for Asian currencies," he said. "In fact, most of the offshore players we surveyed in the past week indicated that they expect deliverable Asian currencies to lose between 5 percent to 8 percent of spot values against the U.S. dollar."

In late trading, the U.S. dollar was trading at S$1.6980, up from $1.6890 late Monday. Traders said the key psychological level at S$1.70 would be breached if the U.S. dollar makes any more gains against the yen.

The dollar was also trading at 36.93 baht, up from 36.7750 baht late Monday. Traders said the yen's descent has affected the strength of the baht, although the U.S. currency continues to move within a wide range-bound band.

"The baht shows how the regionals are somewhat impervious to moves by major currencies," said a trader at a U.S. investment bank in Singapore. "If the U.S. dollar breaks above Y120, then we'll start to see some moves in the regionals. Right now, the lack of liquidity and closed markets - in Hong Kong and Taiwan - have created a lag in the market."

The dollar was also trading at 8,775 rupiah, up from 8,635 Rupiah Monday. Traders expect the U.S. dollar to move between 8,500 rupiah and 9,000 rupiah in coming sessions.

The dollar was also trading at 38.66 pesos on the Philippine Dealing System, up from 38.60 pesos late Monday.

Supple said the peso is fairly valued against the dollar. "The early emergence of the Philippine economy from the regional recession, added to a competitive export sector, highlights the attractiveness of the peso in the region," he said. "While a stronger U.S. dollar will see an upward bias in the dollar-peso, the one-year, non-deliverable forward rate of around 42 pesos appears an adequate if not attractive risk premium for holding pesos."

In North Asia, the dollar was trading at 1,181.8 won, up from 1,175.7 won late Monday. The U.S. currency was also at 32.278 new Taiwan dollars, flat since Monday as the market remains closed for the Chinese New Year holiday.