Asian currencies steady

Most Asian currencies were steady on Thursday as the dollar held ground on solid US retail sales data, while US Treasury Secretary Henry Paulson on a visit to Beijing urged China to embrace a freer currency.
Many analysts remain bullish about the underlying strength of Asian currencies because of solid capital inflows and trade surpluses, despite a wave of verbal and actual intervention by regional central banks to curb currency appreciation.
"We see a little bit of back-off in Asia, the dollar/yen is the driver today," said Tim Condon, head of Asian financial market research at ING in Singapore.
The dollar has strengthened against the yen for more than a week and rose again on Wednesday following strong US retail sales data that shaved expectations for a US cut in interest rates. It was generally steady against the yen on Thursday.
The Thai baht, which has been the market focus this week after its rally sparked central bank intervention on Tuesday, stayed around nine-year highs.
The baht, Asia's best performer this year against the dollar having gained 17 percent, traded within a tight range around 35.25 per dollar. The Taiwan dollar fell 0.13 percent to 32.565 per US dollar, while the Malaysian ringgit recovered from early losses and was flat at 3.545 per dollar.
The South Korean won pared early losses to inch up to about 920 per US dollar, helped by exporters' dollar sales and as local stocks made their biggest one-day percentage gain in almost five months. The Singapore dollar was little changed at about 1.5380 per US dollar, below a nine-year high of 1.5362 set last week.
Paulson, in Beijing with six other cabinet officers as well as Federal Reserve Chairman Ben Bernanke, wasted little time urging Beijing to make the yuan more flexible as a prelude to a freely floating exchange rate in the medium term.
He said a market-driven currency based on economic fundamentals would help China achieve balanced growth and give it more leeway in setting monetary policy.
But analysts generally believe Beijing will stick to the status quo on currency policy, probably allowing the yuan to appreciate 3-5 percent a year. "The (yuan) issue had died down considerably up until November and I think when Paulson returns, the issue will go quiet again," Condon said.
The yuan was largely steady after rising in early trade to 7.818 per dollar, its highest since China revalued the yuan in July 2005. The yuan has now appreciated 3.7 percent since it was revalued by 2.1 percent to 8.11 per dollar and freed from a dollar peg to float within managed bands.
"The yuan has appreciated ahead of the visit. Asian currencies are supported by its relatively better internal growth dynamics, and belief that Asia will be resilient to a US slowdown," said Philip Wee, currency strategist at DBS Bank. "To summarise, the dollar is losing out to better diversification in global growth and foreign reserves," he said.