Yen sets trend for rising regional monies

Yen sets trend for rising regional monies

SINGAPORE (Dow Jones): The yen again set the trend for Southeast Asian currencies during local trading hours on Wednesday.

As the Japanese currency rallied in Tokyo, pushing the U.S. dollar lower by one yen, regional currencies trailed the yen higher.

The Singapore dollar, the Indonesian rupiah and the Philippine peso all ended Asian trading stronger, but their advances were modest, with the U.S. currency generally finding support from good buying interest around its intraday lows.

The Thai baht ended a touch lower, depressed by a flurry of sales late in the day.

In North Asian markets, both the South Korean won and the new Taiwan dollar edged higher, parallel with the yen.

Overall, trading activity in the regional currencies was subdued. Dealers complained that with the end of the first quarter and the March 31 close of the Japanese fiscal year approaching, few market players are prepared to take fresh positions.

"No one wants to get caught in the crossfire if Japanese corporations still have some window-dressing to do," said a trader at a Thai bank, explaining dealers' reluctance to risk getting caught on the wrong side of year-end accounting flows.

Modest customer interest was seen in the Singapore dollar market, with traders in the island republic describing good U.S. dollar bids from a Singapore bank around S$1.7280.

Some dealers identified the demand as one leg of a cross trade in the Australian dollar against the Singapore dollar, which they associated with the expected acquisition of an A$500 million 50 percent stake in Australian airline operator Ansett Holdings Ltd. by Singapore Airlines Ltd.

The bidding interest provided a firm base for the market throughout Asian hours, with the U.S. dollar ending local interbank trading at S$1.7283, down from S$1.7305 the day before.

Activity in the Thai baht was also subdued, as the market debated the implications of the Thai government's fiscal stimulus package, unveiled Tuesday with the blessing of the International Monetary Fund.

After trading to a low of 37.4300 baht early in the day in line with its move against the yen, the U.S. dollar recovered its losses late in Asian trading, lifted by buying to cover short positions, according to dealers.

Late in Asia, the U.S. currency was quoted at 37.5500 baht, up from 37.5150 baht late Tuesday.

The rupiah market paid scant attention to Hubert Neiss, the IMF director responsible for the Asia-Pacific region, who claimed the Indonesian currency is undervalued.

"Over the long run, yes, the rupiah is still over- depreciated," Neiss said in an interview with Dow Jones Newswires. "(We) always have some idea of what is a reasonable range. The rupiah is still below that band," he said.

Neiss also moved to scotch market rumors that Indonesia is preparing to introduce capital controls.

"Forget about it. They're just rumors," he said, explaining: "The central bank is developing a system of monitoring capital flows, which we think is a very good thing."

There was no reaction in the U.S. dollar/rupiah exchange rate, which ended Asian trading at Rp 8,835, down a touch from Rp 8,910 the previous day.

In trading on the Philippine Dealing System, the peso followed the yen higher, with the U.S. dollar dropping to close at 38.695 pesos, down from 38.760 pesos at Tuesday's close, on trading volumes of a mere $65.50 million.

In North Asia the U.S. currency also slipped against the won and the new Taiwan dollar. Against the won the U.S. dollar closed at 1,223.30 won, down from 1,225 won the previous day. Against the Taiwanese currency, the U.S. dollar closed at NT$33.113, compared with NT$33.127 at Tuesday's close.