Asian Currencies: Singapore Dollar Rises, Peso Falls on Growth

By Lilian Karunungan and Ron Harui

Aug. 20 (Bloomberg) -- The Singapore dollar gained the most in a month after it held above a so-called support level for a third day and the U.S. dollar weakened. The Philippine peso fell after the government lowered its economic growth forecast.

Singapore's dollar, which is managed against a basket of currencies by the central bank, climbed from a six-month low after the euro rose 0.6 percent yesterday, the most since July 11. The support level at around S$1.42 represents the Singapore dollar's lows the past three days, according to data compiled by Bloomberg.

``Certainly the U.S. dollar has run out of gas after testing S$1.42,'' said Emmanuel Ng, an economist at Oversea- Chinese Banking Corp. in Singapore. ``The Singapore dollar is trading off its basket components. The euro gained.''

The Singapore dollar rose 0.5 percent, the most since July 15, to S$1.4097 against the U.S. dollar as of 12:06 p.m. in the city from S$1.4165 late yesterday, when it reached S$1.4202, the lowest since Feb. 14. The peso declined 0.5 percent to 45.710 to the U.S. dollar in Manila, according to Tullett Prebon Plc.

Singapore's dollar is the best performer among the 10 most- traded currencies in Asia outside Japan. Ng forecasts the local currency will trade between S$1.4030 and S$1.4130 today.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support is where buy orders may be clustered, while resistance is where there may be sell orders.

Second Time

The Philippine peso fell, reversing earlier gains, after the government forecast weaker economic growth for the second time this year, citing higher oil prices.

The peso declined for a sixth day, after rising as much as 0.3 percent, after National Economic Development Authority Deputy Director-General Augusto Santos said gross domestic product may expand 5.5 percent to 6.4 percent this year, compared with a previous forecast 5.7 percent to 6.6 percent.

``It becomes less attractive to hold peso assets,'' said Joric Nazario, treasurer at Philippine Veterans Bank in Manila. The central bank ``will be reluctant to raise rates and the government will have to do more pump priming, more expenses may mean bigger deficits down the road.''

Malaysia's ringgit rose against the dollar on speculation recent declines were excessive and as U.S. stocks fell on concern credit losses at banks in the world's biggest economy were far from over.

The ringgit's relative strength index, a technical gauge, passed a key level last week, signaling a reversal in direction is due. Lehman Brothers Holdings Inc. may write down about $4 billion in credit losses in the third quarter and American International Group Inc. could be forced to raise more capital, analysts on Wall Street said yesterday.

Fall Excessive

The ringgit rose 0.1 percent to 3.3315 per dollar from 3.3350 at the close yesterday, according to data compiled by Bloomberg. The currency reached its lowest this year at 3.3515 on Aug. 18.

``We saw excessive weakening in the ringgit after the break of 3.3050 due mainly to dollar strength but there should be some consolidation in the dollar going forward,'' said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. ``Any further weakness in the ringgit is unlikely,'' he said, adding that the currency will trade between 3.3200 to 3.3400 against the dollar today.

The 14-day relative strength index reached 80.9 last week for the U.S. dollar versus the ringgit, according to data compiled by Bloomberg. A level above 70 suggests buying of the U.S. currency may have peaked.

`Drastic' Fluctuations

South Korean's won gained, halting an eight-day decline, after Vice Finance Minister Kim Dong Soo said today the government continues to watch foreign-exchange trading for ``drastic'' fluctuations. Bonds advanced.

The comment came after the won weakened below 1,050 to the dollar for the first time in almost seven weeks, signaling that central-bank officials bought Korea's currency to help stem inflation, said Park Hae Il, an options trader with Shinhan Bank in Seoul. The won fell 11 percent this year, the second-worst performer among Asia's 10 most-active currencies.

The currency gained 0.1 percent to 1,048.65 against the dollar, according to Seoul Money Brokerage Services Ltd.

Elsewhere, Indonesia's rupiah rose 0.1 percent to 9,183. Taiwan's dollar was little changed at NT$31.385 and Thailand's baht dropped 0.2 percent to 34.15. The Vietnamese dong advanced 0.3 percent to 16,630.

To contact the reporters on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.