Yen's rebound boosts SE Asian currencies

Yen's rebound boosts SE Asian currencies

SINGAPORE (Dow Jones): Although a rebound in the Japanese yen
lent strength to most Southeast Asian currencies during regional
trading hours on Tuesday, the Singapore dollar failed to benefit,
slumping to a fresh five-month low against the U.S. dollar.

After the U.S. dollar broke above trendline resistance at
S$1.7180 in early trading, a brief flurry of stop-loss buying
pushed the U.S. currency as high as S$1.7225, its highest level
since Sept. 23.

Elsewhere in Asia, the yen's recovery from Monday's lows,
which saw the U.S. dollar dip briefly below Y120, down from its
high of Y122.55 on Monday, provided a powerful shot in the arm
for regional currencies. Boosted by the rising yen, the Thai
baht, Philippine peso, new Taiwan dollar and South Korean won all
ended the day higher.

But although the relative strength of the yen was a major
factor influencing Asian markets Tuesday, analysts and traders
were reluctant to attribute each and every price swing to a move
in the U.S. dollar/yen exchange rate.

"Clearly there is a yen effect, but one can't say these
currencies are moving 100% because of the yen," said Ron Leven,
foreign exchange strategist at J.P. Morgan in Singapore.

The Singapore dollar's decoupling from the yen was most
obvious, as traders and investors continued to sell the currency
in reaction to the weekend's trade figures, which showed an
unexpectedly steep 6.4 percent decline in the country's non-oil
domestic exports for January.

"The Singapore dollar is marching to the same drum it has been
marching to since last October: a trend weakening," declared
Andrew Fung, a Singapore-based treasury economist at Standard
Chartered Bank.

Late in Asia on Tuesday, the U.S. currency was quoted at
S$1.7192, down slightly from its earlier intraday high, but still
significantly above S$1.7147 late in Asian trading the previous
day.

Although the baht ended Tuesday's session in Asia higher
against the U.S. dollar, in line with the stronger yen, traders
said the Thai currency, like the Singapore dollar, was propelled
largely by its own dynamic, and not solely by trading in the
Japanese currency.

Market players, they said, were taking advantage of short-term
implied yields as high as 22 percent to buy into the currency via
the forward market after the U.S. dollar failed to break upward
through resistance at 38 baht.

Toward the end of Asian dealing, the U.S. dollar was quoted at
37.5150 baht, down from 37.7250 baht late the previous day.

The U.S. dollar also slipped against the Philippine peso.
Although much of the U.S. currency's fall was attributable to its
softness against the yen, the peso was also bolstered by the
market's underlying bullishness on the Philippine economy.

"All it needs is one good story for investors to turn around
and buy the peso," said Fung at Standard Chartered. "Although
inflation has been higher than analysts had forecast, the market
appears willing to give President (Joseph) Estrada's
administration the benefit of the doubt when it comes to economic
policy."

By the close of domestic trading, the U.S. dollar had slipped
to 38.99 pesos from 39.260 pesos at Monday's close.

Against the Indonesian rupiah, the U.S. dollar dropped to end
the Asian day at Rp 8,845, compared with Rp 8,905 the day before.

In north Asia, the rise of new Taiwan dollar was assisted by
central bank intervention, with the authorities estimated by
traders to have sold $200 million in support of the local
currency.

At the close of the domestic session the U.S. dollar was
quoted at NT$33.028, down from NT$33.102 at the previous day's
finish.

In Seoul, in trading against the South Korean won, the U.S.
currency closed at 1,212.5 won, compared with 1,216.1 won the day
before.