Asian currencies rise modestly

The Singapore dollar received a boost from stronger-than-expected data on Monday and other Asian currencies rose modestly, tracking the yen after Japan's ruling coalition retained its majority in upper house elections.
The Indonesian rupiah rose to a two-month high of 8,825 a dollar, shrugging off the uncertainty that had dragged on the currency in the run-up to the July 5 presidential election.
With more than half the ballots counted, retired general Susilo Bambang Yudhoyono was leading, but he may not get the required 50 percent majority to avoid a run-off in September.
The Singapore dollar hit a six-week peak of 1.6970, gaining over half a cent after second-quarter GDP data showed the economy grew at a 9.1 percent annualised rate, nearly double expectations.
Economists took this data and the recent tightening in Singapore's short-term rates as indication the authorities wanted the currency higher. Singapore runs its monetary policy by guiding the Sing dollar against an undisclosed trade-weighted basket of currencies.
The currency has started to appreciate only recently, even though the Monetary Authority of Singapore (MAS) said in April it was tightening policy by allowing trade-weighted currency gains.
Economists at Bank of America said the Singapore dollar was trading around 0.5 percent below the centre of the policy band, as per their estimates, and said it would get a boost from the GDP data.
Others agreed. "This is justification for the MAS to allow an appreciation of the Singapore dollar. The Sing should strengthen after this," said Claudio Piron, head of Standard Chartered Bank's currency strategy.
Economists at DBS said data due this week on Singapore's non-oil exports would also confirm a strengthening economy, and that the Sing dollar should strengthen to between 1.671 and 1.688 per dollar.
The US dollar was down more than one percent against the yen from Friday's peaks after the ruling Liberal Democratic Party suffered only a limited setback in Sunday's election for the upper house.
The euro stayed near Friday's four-month highs, with the dollar hurt by worries markets may have been too aggressive in their expectations for US rate raises.
The Philippine peso hit 55.63, its highest in a month, before paring its gains to end flat in local trade.
The South Korean won met resistance around a two-week high of 1,145 per dollar, boosted by rising stocks and the rallying yen.
The Thai baht was a laggard after Thailand confirmed more recurrences of the bird flu virus on the weekend. The Taiwan dollar also rose to a two-week high of 33.67 per dollar, although it lagged regional gains on the day.
The Taiwan dollar has under-performed the region in recent months, after a four percent rally from early 2004 up to April.
"What we have seen should be in the context of a slow, painful unwinding of the strength.
The Taiwan dollar is just giving back ground it gained quite quickly earlier in the year," said David Simmonds, markets strategist with the Royal Bank of Scotland.