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Most Southeast Asian Currencies Decline Against Dollar

Wednesday in Asia, most Southeast Asian currencies plunged against the U.S. dollar. The Indian rupee, Malaysian ringgit and the Philippine peso dropped to 2-day lows against the dollar.

But the Chinese yuan and the Taiwan dollar showed strength against the dollar.

Despite some profit taking after recent strong gains, most Asian markets surged higher today, however, were not any significantly pronounced as investors chose to exit counters at small rallies.

None too impressive cues from Wall Street and lack of triggers from the Asia-Pacific region appear to have made the participants a bit defensive today.

After a choppy ride, the Dow ended lower by 29.23 points yesterday as traders cut down long positions and took profits as data released by the U.S. Commerce Department showed a decline in housing starts in April to an annual rate of 458,000 units, compared to March's revised rate of 525,000 units, suggesting a strong reacceleration is still some way off. New restrictions placed on the credit card industry sent financial stocks tumbling down sharply.

Against the U.S. currency, the Singapore dollar fell to 1.4668 during early Asian deals on Wednesday. The near term support level for the Singapore dollar is seen at 1.47. The pair was worth 1.4632 at yesterday's close.

In early Asian trading on Wednesday, the Hong Kong dollar slipped to 7.7528 against the U.S. currency. This may be compared to yesterday's New York session close of 7.7518. On the downside, 7.754 is seen as the next likely target for the Hong Kong dollar.

Hong Kong's Census and Statistics Department said yesterday that the seasonally adjusted jobless rate rose to 5.3 percent during February to April from 5.2 percent recorded in January to March. It was a touch lower than the expected rate of 5.4 percent. After discounting the seasonal factor, the unemployment rate increased to 5.3 percent from 5.2 percent.

Also, Chief Executive of the Hong Kong Monetary Authority Joseph Yam will step down from his post on October 1, the Hong Kong government announced yesterday. Financial Secretary John Tsang said the government was in the final stages of identifying Yam's replacement at the helm of the HKMA.

The Thai baht that closed yesterday's trading at 34.42 against the dollar dropped to 34.4850 in early Asian deals on Wednesday. If the Thailand currency falls further, it may test near term support around the 34.67 level.

Today, Thailand's central bank will announce its decision on interest rates, with analysts expecting the bank to pare the rate by 25 basis points from the current 1.25 percent to 1 percent even.

During early Asian deals on Wednesday, the Malaysian ringgit declined to a 2-day low of 3.5570 against the dollar. The next downside target level for the Malaysian currency is seen at 3.578. At yesterday's close, the dollar-ringgit pair was quoted at 3.5290.

Malaysia's manufacturing sector sales value dropped 25.5 percent year-on-year in March compared to a revised 22.9 percent fall in February, the Department of Statistics said yesterday. The sales value declined by 12.5 billion ringgit to 36.6 billion ringgit. Month-on-month, the manufacturing sales value was up 6.3 percent in March.

Today, Malaysia is scheduled to release April figures for its consumer price index, with analysts looking for an increase of 3.2 percent on year following the 3.5 percent increase in March.

The Philippine peso weakened against the dollar in early Asian trading on Wednesday. The dollar-peso pair that closed yesterday's deals at 47.08 reached 47.54 at 9:45 pm ET. This set a 2-day low for the peso. On the downside, 47.80 is seen as the next target level for the Philippine currency.

During early Asian deals on Wednesday, the South Korean won edged down to 1254.10 against the dollar. The near term support for the Korean currency is seen at the 1275 level. The dollar-won pair was worth 1244.80 at Tuesday's North American session close.

The Taiwan dollar that closed yesterday's trading at 32.90 against the U.S. currency soared to a 1-week high of 32.8460 during early Asian deals on Wednesday. The next upside target level for the Taiwan dollar is seen at 32.7655.

Taiwan will provide current account numbers for the first quarter of 2009. Forecasts call for a surplus of $10.5 billion, up from $7.9 billion in the previous three months.

In early Asian deals on Wednesday, the Chinese yuan advanced against the U.S. dollar. At 11:15 pm ET, the yuan reached a high of 6.8230 per dollar, compared to 6.8295 hit late New York Tuesday. If the Chinese currency gains further, it may likely target the 6.818 level.

The People's Bank of China has set today's central parity rate for the dollar-yuan pair at 6.8251.

Wednesday, the Indian rupee opened lower against the U.S. dollar and touched a 2-day low of 47.9850 at 11:35 pm ET. If the Indian currency weakens further, it may likely target the 48.33 level. At yesterday's New York session close, the dollar-rupee pair was quoted at 47.65.

The U.S. Federal Reserve is scheduled to release the minutes of its April 29th meeting at 2 pm ET today.

At its April meeting, the Fed maintained its key fed funds target rate unchanged at a range of 0%-0.25%. The FOMC noted that the economy continued to contract, with the pace of contraction slowing somewhat. Despite the stabilization in consumer spending, the committee noted that spending continued to be constrained by job losses, lower housing wealth and tight credit.

Overall, the central bank is of the view that economic activity is likely to remain weak for a time. That said, the committee expects sustained economic growth will resume gradually due to policy actions, fiscal and monetary stimulus and market forces. Additionally, the fed suggested that inflation may remain below rates that are consistent with economic growth and price stability.

Philadelphia Federal Reserve Bank President Charles Plosser is scheduled to speak to the New York Money Marketeers at pm ET both on Wednesday and Thursday.

by RTTNews Staff Writer

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