Won drops, Asian currencies poised for weekly gain

Won drops, Asian currencies poised for weekly gain

Bloomberg, Singapore

South Korea's won fell for the second day on speculation the
central bank will sell it to protect the earnings of exporters
after an official said that the currency rose "too fast."

The won's 0.5 percent gain against the dollar this weak
threatens to erode the competitiveness of companies such as
Hyundai Motor Co., the nation's biggest automaker.

The Bank of Korea is monitoring the won's performance versus
the dollar and the yen, Oh Jae Kwon, head of the central bank's
foreign- exchange team in Seoul, said.

The won declined 0.5 percent to 1,038.10 against the dollar as
of 4 p.m. local time, according to Seoul Money Brokerage Services
Ltd.

"Everybody thinks the authorities want to keep the won from
rising past 1,030," said Sam Hong, a currency derivatives
department manager at Shinhan Bank in Seoul. "The authorities
will strongly intervene."

Exports account for about 40 percent of the Korean economy.
The commerce ministry on Jan. 4 forecast export growth will slow
to 12 percent this year from 31 percent in 2004, partly because
of the won's appreciation.

South Korea's central bank on Dec. 2 said it bought dollars to
stall won gains. Currency holdings rose to a record $199.1
billion last month, the bank said on Jan. 4.

The Taiwan dollar fell for a second day after the benchmark
stock index dropped, fanning speculation investors abroad will
increase sales of the island's shares.

Overseas money managers on Thursday sold a net NT$5.6 billion
($176 million) of Taiwan's stocks, the most since Jan. 5,
according to stock exchange figures. The Taiex index of equities
had a weekly decline.

Taiwan's dollar fell 0.1 percent to NT$31.919, according to
Taipei Forex Inc. The currency may slide as low as NT$32.05
today, Ho said.

Other Asian currencies also fell after Johnson & Johnson, the
world's biggest maker of medical devices, said it will return
about $11 billion in overseas profit to the U.S., taking
advantage of a one-year tax break.

"The dollar rose against Asian currencies because of the
report on Johnson & Johnson sending the money into the U.S.,"
said Rafael Algarra, head of currency and fixed-income trading at
Security Bank Corp. in Manila.

Thailand's baht weakened 0.1 percent to 38.60 and the
Singapore dollar fell 0.1 percent to S$1.6387. Trading may be
less than usual in the city-state because financial markets were
closed for a holiday.

The Philippine peso weakened 0.1 percent to 55.53, according
to the Bankers Association of the Philippines. The currency may
trade between 55.55 and 55.65 through next week, Algarra said.

Philippine Finance Secretary Juanita Amatong, who helped the
administration of President Gloria Arroyo narrow the nation's
budget deficit, said she's resigning after more than a year in
office. She said she expects Trade Secretary Cesar Purisima to
replace her.

"It's neutral news" for the peso, Security Bank Corp.'s
Algarra said. "There was a resignation, but Purisima is highly
valued by the market."

The region's currencies were poised for a weekly gain on
speculation China and Malaysia will alter their pegged exchange
rates to allow for gains.

China will probably let its currency appreciate against the
dollar by the end of June, Merrill Lynch & Co. yesterday said in
an interview.

Merrill, the world's largest securities firm, expects that
faster inflation will prompt policy makers in China to revalue
the yuan 10 percent higher against the U.S. currency, it said.