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India rupee

BOMBAY: The Indian rupee ended steady on Monday, off the afternoon's highs, amid dollar purchases in late trade by the State Bank of India (SBI), dealers said.

The rupee had firmed in the afternoon on heavy dollar sales by a few large banks before dollar bids at the 43.56 level checked gains, they said.

The rupee ended Monday at 43.57/575 per dollar, little changed from the previous close of 43.575/58. It was not known if the SBI was buying on behalf of customers, dealers said.

In the forward market, paying pressure had reduced and there was more of profit-taking on received positions as the market reconciled to interest rates remaining at current levels, dealers said.

"Now, more and more traders feel interest rates will not be cut this financial year. So the receiving has stopped completely, but there is not much paying either," a dealer with a state-run bank said.

The six-month premium ended Monday at an annualised 3.42 percent compared with Friday's 3.28.

Dealers said premia will stabilise at current levels for a while.

While not commenting on interest rates, the Reserve Bank of India's (RBI) Deputy Governor Y.V.Reddy at the weekend assured markets that both this year's additional government borrowing until March and next year's requirements will be done smoothly.-Reuters

Taiwanese dollar

TAIPEI: The Taiwan dollar failed to sustain its early gains on Monday, closing lower against its US counterpart amid a wave of routine greenback buying by importers and political uncertainty ahead of the March 18 presidential race.

Dealers nonetheless said persistent foreign equity fund inflows and apparent central bank's defence cushioned the Taiwan dollar's downtrend.

CLOSE: T$30.764 to the US dollar against its close of T$30.743 on Saturday. On the smaller Cosmos exchange, the Taiwan unit ended at T$30.77, weakening from Saturday's finish at T$30.743.

TURNOVER THROUGH DEALERS: relatively active at US$333.5 million, compared to Saturday's half-day session of US$72.5 million. Cosmos turnover stood at US$118 million compared with Saturday's half-day session of US$94 million.

The Taiwan dollar opened slightly higher and continued to advance, but its gains started to pare by late morning, touching as low as T$30.774 until what dealers said active defence by the central bank helped cushion the fall.

"Importers were active in buying US dollars for commercial needs, but as the March election is approaching, we do not rule out a massive greenback buying if importers and investors sense something worst was going to happen," a local bank dealer said.

Dealers noted large overseas payments, which they suspected could be government payments for arms and crude purchases.

Interbank operators also increased their US dollar position amid political uncertainty over the presidential elections, dealers said.

Dealers said foreign institutional investors were unmoved by such an uncertainty and continued to pour funds in Taiwan stocks. Foreign funds bought a net T$2.243 billion in local equities, bringing the accumulated net buying to T$18.437 billion over nine consecutive sessions.

Dealers said the central bank was expected to keep a watchful eye on the foreign exchange market, keeping the local unit at around T$30.77.

For Tuesday, dealers said they expected the Taiwan unit to range between T$30.73 and T$30.78. -Reuters

Chinese yuan

SHANGHAI: China's yuan closed up slightly against the dollar in thin trade on Monday as market talk that the central bank had re-affirmed its policy to keep the yuan stable this year triggered light buying from domestic banks.

The yuan ended at 8.2783 to one US dollar from 8.2786 on Friday after moving in a narrow range of 8.2782 and 8.2787.

Dealers said there was market talk that Dai Xianglong, governor of the central People's Bank of China, had said the government would keep the yuan stable this year.

They said Dai was quoted as making the remarks to delegates at the annual session of the National People's Congress, the parliament, which opened on Sunday.

"Talks about Dai's remarks led to some buying by domestic banks, pushing the yuan up slightly," a local bank dealer said.

Despite the rise on Monday, dealers said there was a rough balance of foreign exchange demand and supply on the market and the potential for the yuan to rise further would be limited.

The yuan was supported by China's healthy foreign trade surplus in the past few months, which has ensured a steady flow of foreign exchange onto the market, they said.

But it was under pressure from increased dollar demand as China's imports picked up after the Lunar New Year holiday in early February, they said.

The yuan was likely to move narrowly between 8.2780 and 8.2800 in the near term, dealers said.

The yuan closed higher against the Japanese yen at 7.6980 to 100 yen from 7.7093 on Friday. It ended unchanged against the Hong Kong dollar at 1.0631 to HK$1.0-Reuters

S Korean won

SEOUL: The South Korean won closed higher against the dollar on Monday as foreign investors converted some $400 million into the local currency to settle their stock purchases from last week, dealers said.

But heavy dolllar-buying intervention by state-run banks, estimated at about $200 million, limited the dollar's slide, they said.

The won closed at 1,119.2 per dollar against Friday's close of 1,121.4. It opened at 1,122.3 and ranged between 1,118.4 and 1,122.3. "Pressure for the won's appreciation from foreign buying of local stocks was great," said a foreign bank dealer. "So was the government's will to curb the won's rise through intervention."

Foreign investors bought a net 250 billion won worth of stocks on the Korea Stock Exchange on Monday on top of a net 855.9 billion won on Friday.

In an effort to discourage the short-dollar sentiment coming from dollar inflows, monetary authorities repeated their pledge to take action. A senior official at the central Bank of Korea said before the market opened that monetary authorities were ready to intervene to stabilise the currency market.

He also said the won's steep rise against the dollar due to inflows of dollars from foreign equity investors was not desirable.

The Ministry of Finance and Economy issued a similar verbal intervention in the afternoon, when the dollar/won rate fell Dealers said a finance ministry auction on Monday to roll over forex bonds had little impact on the currency market.

The Ministry of Finance and Economy sold 1.3 trillion won worth of one-year foreign exchange stabilisation bonds, an official at the central bank said.

The Finance Ministry sold the bonds, which will be issued on Wednesday, to counter 1.3 trillion won worth of forex bonds that are due to mature on March 15.

Analysts said the government was sympathetic to local exporters and business conglomerates, who want a competitive currency ahead of general elections in April.

"The government shows alarming signs of acceding to these demands as the finance ministry stated the undesirability of a stronger currency in a climate of a falling trade surplus," said Barclays Capital in a report.

Dealers forecast the dollar/won rate would range from 1,115 to 1,122 on Tuesday.

"The government appears to have set its defence line at the 1,115 level," said a local bank dealer. "The government's vow to take action would be heeded well after it soaked up about $1 billion from the currency market last week.

The finance ministry's determination to keep the won from appreciating seems to be at odds with the Bank of Korea's anti-inflation policy, some fund managers and anlaysts said.

"A stronger won has been a key factor to containing inflationary pressure, but the daily verbal and direct interventions cast doubt on the government's policy on the won," said one fund manager at an investment trust company.

"The market's main concern is that the Bank of Korea may be forced to raise short-term interest rates to fight inflation if the finance ministry does not let the won appreciate," he said.

Dealers said the Korean unit could rise above the 1,110 won level this week to test a year high if the dollar inflows from foreign stock purchases continue.

In the non-deliverable forward market, the six-month won was quoted at 1,121.0/22.5 against 1,122.5/24.0 late on Friday, while the one-year won stood at 1,123.5/25.5 against 1,125.5/27. -Reuters

Philippine peso

MANILA: The Philippine peso ended at its day-low on Monday as corporate dollar demand at 40.85 and the weakening of the Thai baht past 38 per dollar sparked dollar buying towards the close.

The local unit finished at 40.90 to the dollar from the close of 40.88 on Friday. It reached a high of 40.82. Volume weakened to $167.7 million from the previous $174.2 million.

"The regional factor still prevailed despite higher T-bill (rates), despite low inflation. It goes to show that we still have to resolve a lot of things," a dealer with a local bank said, referring to prevailing negative investor sentiment on the country. Investors have turned bearish on the Philippines following news of a price manipulation scandal, the slow pace of economic reform bills in Congress and perceptions of cronyism in the Estrada administration.

Another dealer said: "Those who sold dollars to corporates earlier were the ones who covered their short positions later because the baht might weaken to 38.20/38.30 overnight."

The peso follows the baht because the Philippines and Thailand compete in the same export markets. Banks ignored the higher domestic interest rates and low February annual inflation because investors were putting more weight on the expected rise in US interest rates, dealers said.

At the auction on Monday, the benchmark 91-day Treasury bill rate added 14.9 basis points to 8.996 percent, which dealers said was due to the expected 25 basis point increase in US rates later this month.

The Bureau of Treasury did not fully award its offering, indicating the government was keeping interest rates low.

"The market doesn't want to short the dollar and people are still trying to price in the US rate increase. We might experience some volatility," another dealer said.

Annual inflation in February was at three percent, the low end of the government's projection of 3.0 to 3.6 percent.

Socio-economic Planning Secretary Felipe Medalla said he expected the annual inflation rate in March to rise to 3.4 to 4.3 percent.

Dealers said the peso would again test the 41 per dollar level on Tuesday, with an eye on a possible intervention by the central bank.

Tuesday's trading range was placed at 40.80 to 41.00. -Reuters