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Emerging Asia FX-Weaker as U.S. rate view weighs

Written by: Staff

SINGAPORE, Mar 24 (Reuters) Most Asian currencies hit multi-week lows against the dollar on Friday, undermined by a view that the Federal Reserve would keep lifting U.S. interest rates beyond an expected increase next week.

The Taiwan dollar eased more than a third of a percent to 32.692 per U.S. dollar, its weakest level in almost three months, while the South Korean won fell to its lowest in almost two weeks at 982.0 per dollar.

The Singapore dollar and Thai baht both fell to their lowest level in 1 weeks.

The Indonesian rupiah eased to 9,145 per dollar. about 0.7 percent weaker from late Asia levels on Thursday, and below this week's 15-month highs of about 9,010 per dollar.

Weakness across Asian currency markets followed surprisingly strong U.S. housing data on Thursday that bolstered expectations for more dollar-friendly rate rises.

The U.S. Federal Reserves is widely expected to raise its key rate by a quarter point to 4.75 percent next Tuesday. It has lifted loan rates 14 times since June 2004.

''Asian currencies are weaker because there are shifting U.S. rate expectations,'' said Thio Chin Loo, a senior currency strategist at BNP Paribas.

''Commodity currencies are taking a hit and that tells us we are in a new environment where yields are heading higher.

Emerging markets are at risk if stock markets falter and interest rates rise, so there could be more volatility in Asian markets.'' News of an unexpected contraction in the New Zealand economy in the fourth quarter of 2005 triggered fresh selling in the New Zealand dollar and sent the Australian dollar to a 18-month low against its U.S. counterpart.

A rise in oil prices also weighed on Asian currencies, as the market worried about higher inflation and the impact on economic growth, dealers said.

Oil prices rose more than 3 percent on Thursday as uncertainty over Nigerian exports resurfaced and maintenance work at refineries renewed concern over U.S. fuel supply.

Elsewhere, a confrontation between the United States and China over Beijing's currency policy appeared less likely after a leading Senate critic, Charles Schumer, said he was hopeful China was moving in the right direction.

Schumer and Senator Lindsay Graham are co-authors of a bill scheduled for a vote on March 31 that threatens to punish China over the currency issue. They have been holding talks with officials in Beijing this week.

The yuan has appreciated about one percent since it was revalued by 2.1 percent to 8.11 per dollar on July 21, and freed from a dollar peg to float with managed bands.

CURRENCIES VS U.S. DOLLAR Change on the day at 0250 GMT Currency Latest bid Previous day Pct Move Japan yen 117.86 116.85 -0.86 Sing dlr 1.6210 1.6169 -0.25 Taiwan dlr 32.650 32.578 -0.22 Korean won 981.30 975.60 -0.58 Baht 39.12 39.01 -0.28 Peso 51.19 51.16 -0.06 Rupiah 9112.00 9080.00 -0.35 Ringgit 3.6950 3.6895 -0.15 Yuan 8.0299 8.0277 -0.03 Change so far in 2006 Currency Latest bid End prev year Pct Move Japan yen 117.86 117.96 +0.08 Sing dlr 1.6210 1.6625 +2.56 Taiwan dlr 32.650 32.850 +0.61 Korean won 981.30 1011.60 +3.09 Baht 39.12 41.11 +5.09 Peso 51.19 53.09 +3.71 Rupiah 9112.00 9835.00 +7.93 Ringgit 3.6950 3.7790 +2.27 Yuan 8.0299 8.0702 +0.50 REUTERS CH KP1118

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