'Singapore, India may be selling currency'

The central banks of Singapore, Malaysia, the Philippines and India may be selling their currencies to stem gains and protect exporters, JPMorgan Chase Bank said.

The Singapore dollar weakened 0.5 per cent yesterday, the biggest drop in more than six months, after touching the strongest in nine years. The Malaysian ringgit snapped a five-day advance today, the Philippine peso slipped from a six-year high, and the rupee halted a three-day rally.

"Singapore seems the most aggressive Asian central bank, but it seems Malaysia, the Philippines and India may also be trying to smooth their currencies,'' said Claudio Piron, head of Asian foreign-exchange research at JPMorgan in Singapore. ``They know they can't buck the trend, but they've invested a large amount of effort. This may carry on for the next few days.''

Southern Asian currencies have climbed since the Group of Seven industrialised nations last April urged the region's governments to allow their currencies to strengthen. Those nations have lost competitiveness to companies in Japan, after the yen dropped for the past two years, and China, which restricts movements in the yuan.

The peso slipped 0.2 percent to 47.96 as of 5:27 p.m. in Manila. Export growth slowed to an annual 7 percent pace in February, from 22 percent the previous month, a report showed today. The Indian rupee was little changed at 42.83, down from 42.745 reached on April 9, the highest in eight years.

The Malaysian ringgit slipped 0.1 percent to 3.4495 and the Singapore dollar was at S$1.5183.

The Monetary Authority of Singapore and the Reserve Bank of India both declined to comment. Malaysia's Bank Negara and the Philippine central bank didn't reply to requests seeking comment.

Foreign Reserves
Singapore's central bank yesterday reiterated a three-year policy of a ``modest and gradual appreciation'' in the currency, adding that manufacturing will slow and the electronics industry is "likely to remain sluggish.'' Singapore's electronics exports fell four times in the five months to February.

Since the April 21 G-7 meeting, the peso has climbed 7.7 per cent, the ringgit 6.1 per cent, the Singapore dollar 5.2 per cent and the Indian rupee 5.2 per cent.

Rising foreign exchange reserves may show central banks are buying the dollar and selling their own currencies, said Piron.

Philippine foreign-exchange reserves climbed for a 15th month in March to a record $24.7 billion, a report showed April 4. Malaysia's reserves reached $88.6 billion, the highest since at least 1998.

"We can't confirm these interventions, but it's likely given their foreign exchange reserves are continuing to rise,'' said Piron. ``They don't want their currencies to move up too sharply, due to exports.''

The World Bank and the Asian Development Bank forecast slowing world trade and export volumes this year as US demand eases.