Yen pulls won up; Southeast Asian monies down

Yen pulls won up; Southeast Asian monies down

HONG KONG (Dow Jones): Asian currencies had a mixed day against the dollar Monday. While the Korean won was tugged higher by an abrupt run-up in the value of the Japanese currency during Asian trading hours, the yen's surge failed to support Southeast Asian currencies, which finished the day down.

The won shrugged off a 5 percent decline in Korea's benchmark Kospi equity index. It climbed partly in response to sales of the dollar by local exporters anxious to repatriate foreign currency revenues before the end of the month.

In heavy trading the U.S. currency was sold down to an intraday low of 1,128.10 won before it bounced to end the session at 1,134.30 won. At Friday's close the dollar was at 1,136.60 won.

Despite Monday's gains, analysts remained cautious on the short-term outlook for the Korean currency.

"It's hard to say buy now," said Chia Hsin-Li, foreign exchange strategist at J.P. Morgan in Singapore.

Although the Korean currency retains its long-term positive outlook, swings in the value of the yen represent a "wild card" in the short term, she explained, saying that any further weakness in the yen would put pressure on the won.

Although the dollar nose-dived in Asia Monday, the U.S. currency is still trending upwards against the yen after finding support above Y108, according to technical analysts at Standard Chartered Bank.

Southeast Asian currencies remained weak, despite the strength of the yen.

The softness in regional currencies reflected the disillusion of investors who bought into Asian markets late in 1999 and earlier this year in expectation of a fundamentally-driven bull run, only to see Asian currencies trail the yen lower.

"On a three- to six-month view, I still see the regional currencies going higher," said David Simmonds, Asian foreign exchange strategist at Citibank in Singapore.

Simmonds echoed the belief of most analysts that strong economic growth and sizable current account surpluses will push Asian currencies in the long term.

But in the short run he remained wary.

"On a one- to three-month view I think we are going to see a strong dollar internationally," he said.

That strength in the U.S. dollar is helping to temper demand for Asian currencies. Despite an economic performance strong enough to allow the government to present a surplus budget Friday, the Singapore dollar slipped Monday.

But with no significant inflation evident in Singapore and the island under competitive pressure to keep business costs down, there is little chance the local monetary authority will allow the Singapore dollar to strengthen just yet.

Late in Asia Monday, the U.S. dollar was quoted against the Singapore currency at S$1.7095, down a fraction from S$1.7099 late Friday.

Against the Indonesian rupiah the dollar was at Rp 7,450, compared with Rp 7,455 late Friday.

The Thai baht also struggled Monday, after central bank Governor Chatu Mongol Sonakul expressed fears that the baht's strength relative to other regional currencies may be undermining Thailand's export competitiveness.

Late in Asia the dollar was quoted against the baht at 37.895 baht, down slightly from 37.980 baht towards the end of Friday's trading.

On the Philippine Dealing System, the dollar ended at 40.950 pesos, up from 40.870 pesos at the previous close.