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Asian forex market

mostly lower due to

yen fall

HONG KONG: The yen led most Asian currencies lower during the week due to the prospects of a downgrading of the rating for yen based debt and the prospects of higher US interest rates.

The yen dipped below the 110 level against the US dollar for the first time since September due to Moody's Investors Services saying it may lower Japan's sovereign rating for yen-denominated debt.

Elsewhere in the region, currencies were generally slightly lower in reaction to the fall in the yen but most were moving in a tight range.

JAPANESE YEN: The yen lost ground during the week after Moody's Investors Service threatened to cut Japan's yen-based debt rating, dealers said.

The Japanese unit traded at 110.73-76 against the dollar late Friday, compared with 108.50-53 on Thursday last week. Financial markets were closed here Friday last week for a national holiday.

The yen fell through 110 to the dollar for the first time in five months on Thursday after Moody's Investors Service threatened to cut Japan's yen-based sovereign debt rating.

"Following the Moody's announcement, massive yen-selling emerged which pressured the yen to a low of 110.17," a dealer said.

Selling pressure continued on Friday after Federal Reserve chairman Alan Greenspan hinted at an increase in interest rates to curb the red-hot US economy, dealers said.

"Buying sentiment remained firm as Greenspan hinted there could be another rise in interest rates," said Bank of Tokyo-Mitsubishi foreign exchange dealer Kazumasa Inoue.

"That could create a further disparity in rates between the United States and Japan," he said.

Higher interest rates increase the return on assets and the demand for local currency to buy them.

Dealers said the yen was expected to face selling pressure during the coming week.

AUSTRALIAN DOLLAR: The Australian dollar appears locked in a 62.5-63.5 US cent range but downside risks dominate in the week ahead, brokers said.

"Absence of yield support and goods and services tax concerns say sell the Aussie but economic fundamentals such as rising commodity prices and narrowing trade deficit says buy," said Colonial State Bank chief economist Craig James.

"The Aussie appears locked in but downside risks dominate."

The Australian dollar ended the week at 63.25 US cents from 62.89 US cents a week earlier.

On the Reserve Bank's Trade Weighted Index the Australian dollar ended on Friday at 55.9 from 55.3 the previous week.

NEW ZEALAND DOLLAR: The New Zealand dollar closed on Friday at 49.22 US cents, up from the 49.11 cents close of a week earlier.

Dealers say trading during the week was light.

HONG KONG DOLLAR: The Hong Kong dollar stood at 7.7807-7.7809 on Friday from 7.8711-7821 the previous week.

TAIWAN DOLLAR: The Taiwan dollar closed at 30.715 against the greenback on Friday compared to 30.625 a week earlier amid central bank intervention to curb the currency's appreciation.

SINGAPORE DOLLAR: The Singapore dollar depreciated to 1.7038 to the US dollar on Friday, from 1.6940 a week earlier.

PHILIPPINE PESO: The Philippine currency closed marginally lower at 40.67 pesos against the US dollar on February 18 from 40.44 a week earlier.

SOUTH KOREAN WON: The won weakened to 1,130.20 won against the US dollar on Friday from 1,115 a week earlier as the government said it would issue one trillion won (884 million dollars) in bonds to curb the appreciation of the won.

INDONESIAN RUPIAH: The Indonesian rupiah weakened to 7,405 rupiah to the US dollar on Friday compared with 7,325 a week earlier amid ongoing political concerns and the weakening of the yen.

THAI BAHT: The Thai baht weakened against the dollar in line with regional currencies, especially the Japanese yen, and as investors moved money out of the unattractive Thai stock market, dealers said.

The Thai unit closed on Friday at a new year low of 38.00-07 bath to the greenback, compared with the previous week's close of 37.40-55ÑAFP