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Emerging Asia FX-Edging higher as rates view hits dollar

By Staff
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SINGAPORE, Apr 18 (Reuters) Most Asian currencies nudged higher against the dollar on Tuesday on a growing view that U.S. interest rate increases may be nearing an end, with the Singapore dollar extending gains to its strongest in nearly eight years.

The Philippine peso bucked the regional trend and eased about a third of a percent to 51.49 per dollar -- its lowest level in just over five weeks.

A trader in Manila said the market had tried to push the peso to the stronger side of the 51 level in the last three to four weeks, but the failure to achieve a significant break saw local corporates step in and buy dollars instead.

In contrast to the peso, the Singapore dollar rose to 1.5999 per U.S. dollar, its strongest in almost eight years, before pulling back slightly to 1.6020.

The South Korean won was a third of a percent firmer at 952.7, while the Thai baht hovered within sight of Monday's six-year high at about 37.87 per dollar.

''It is more of a sell-dollar story than an Asian story today,'' said Westpac senior currency strategist Sean Callow.

''There is a great desire among some people in the market to call an end to the Fed tightening cycle and sell the dollar on the back of it,'' Callow said.

The dollar shed about one percent against the euro and 0.8 percent versus the yen on Monday as the expectations of an end to U.S. rate rises took a toll.

Callow said minutes from the Fed's March meeting and U.S.

March housing data due later on Tuesday would be watched for further clues on rates.

In Singapore, dealers said the market was trying to test the Monetary Authority of Singapore's (MAS) tolerance for further currency gains.

Last Tuesday, the MAS stuck to a policy of gradual currency appreciation, surprising markets who were looking for it allow a bigger rise in the trade-weighted Singapore dollar. The MAS conducts policy by steering the local currency within an undisclosed band based on a trade-weighted basket of currencies.

Some analysts said the Sing dollar's rise since the decision suggested the current policy permitted it to have a wider band and a steeper appreciation than most analysts had estimated.

''The signals are very confusing. The Sing dollar has traded above the policy band almost every single day since that policy decision, and they haven't intervened to keep it within the envelope,'' a Sing dollar trader said.

CURRENCIES VS U.S. DOLLAR Change on the day at 0226 GMT Currency Latest bid Previous day Pct Move Japan yen 117.91 118.26 +0.30 Sing dlr 1.6019 1.6038 +0.12 Taiwan dlr 32.441 32.456 +0.05 Korean won 952.90 955.70 +0.29 Baht 37.95 37.92 -0.08 Peso 51.46 51.34 -0.23 Rupiah 8975.00 8985.00 +0.11 Ringgit 3.6675 3.6690 +0.04 Yuan 8.0175 8.0174 0.00 Change so far in 2006 Currency Latest bid End prev year Pct Move Japan yen 117.91 117.96 +0.04 Sing dlr 1.6019 1.6625 +3.78 Taiwan dlr 32.441 32.850 +1.26 Korean won 952.90 1011.60 +6.16 Baht 37.95 41.11 +8.33 Peso 51.46 53.09 +3.17 Rupiah 8975.00 9835.00 +9.58 Ringgit 3.6675 3.7790 +3.04 Yuan 8.0175 8.0702 +0.66 REUTERS CS HS0918

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