Thai baht down to near 6-month low as swaps drop

Thai baht down to near 6-month low as swaps drop

SINGAPORE (Dow Jones): A steep fall in the value of the Thai
baht enlivened an otherwise lackluster day of trading in
Southeast Asian currency markets Friday.

Fresh dollar buying from U.S. players in the offshore market
pushed the U.S. currency higher against the baht right from the
start of Asian trading. At one point in the Asian morning the
U.S. dollar was driven as high as 38 baht, its strongest level in
nearly six months.

It later fell back to end the day slightly below the 38 baht
mark. But with onshore Thai markets closed for the Songkran
Festival on Monday through Wednesday next week, many dealers
expect offshore players to propel the U.S. currency higher still
in the near term.

The immediate trigger for the U.S. dollar's rise Friday was a
collapse in the rates on U.S. dollar/baht swaps in the offshore
markets.

Late Friday in Asia the U.S. currency was quoted at 37.9950
baht, up from 37.7650 baht towards the end of Thursday's session.

And with Thailand on holiday for most of next week, there will
be little opposition to stop the dollar going higher still, as
the onshore market participants whose offers have capped the U.S.
currency's potential gains in recent sessions will be absent from
the market.

Activity in other regional markets was quieter on Friday. The
Singapore dollar ended little changed on the session as traders
continued to look to moves in the U.S. dollar/yen exchange rate
for their trading cues.

Remarks by Singapore's deputy prime minister Tony Tan, who
told the Asia-Pacific Council of the American Chamber of Commerce
that Singapore's economic growth is likely to exceed the
government's official forecast of 1 percent this year, had little
impact on the market.

Throughout the day, the U.S. dollar remained locked in a
S$1.7300 to S$1.7350 range, ending interbank trading at S$1.7335,
little changed from S$1.7327 the previous day.

Trading activity in the Indonesian rupiah was "dead" according
to one dealer at a U.S. bank in Singapore. The rupiah was quoted
at Rp 8,728 in late trading in Jakarta, down, down a fraction
from Rp 8,760 on Thursday.

With some U.S. dollar buying interest seen below Rp 8,700, and
Bank Indonesia believed to be selling the U.S. currency above Rp
8,800, few dealers expect the exchange rate to stray beyond the
same Rp 100 range over the coming week.

With markets in Manila closed for a holiday on Friday, there
was no trading in the Philippine peso.

Despite healthy inflows of foreign investment funds, the South
Korean won ended flat on Friday, as U.S. dollar buying by the
state-run Export-Import Bank continued to absorb the supply.

Traders widely assumed that the government was directing the
dollar buying in order to hold down the won and preserve Korea's
export competitiveness.

At the close of local trading the U.S. dollar was at 1,223.10
won, unchanged from the previous day.

Foreign fund inflows were also an important influence on the
new Taiwan dollar on Friday, lifting the local currency despite
central bank activity to stabilize the market.

At the close the U.S. dollar was at NT$33.0995, compared with
NT$33.118 the previous day.