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23/03/2008 | | | |

13:27 GMT | | | |

| High | Low | Close |

USD/JPY | 99.67 | 99.27 | 99.61 |

EUR/USD | 1.5473 | 1.5425 | 1.5431 |

EUR/JPY | 154.17 | 153.28 | 153.71 |

GBP/USD | 1.9857 | 1.9812 | 1.9812 |

AUD/USD | 0.903 | 0.9007 | 0.902 |

NZD/USD | 0.796 | 0.7902 | 0.7921 |

USD/SGD | 1.3914 | 1.3888 | 1.39 |

USD/THB | 31.33 | 31.28 | 31.29 |

| | | |

24th March 2008

Asia Open / Overnight Highlights

- Major mkts such as US, UK and Europe closed for Easter holidays rendering very quiet trades during Fri's London/NY sessions.

- S&P has downgraded the outlook for US brokerage business to negative given concerns about profit outlook and increased unpredictability of business trends. The big names such as Goldman, Lehman, Merrill were downgraded to negative outlook with possibility of one notch downgrade being cited. Morgan Stanley meanwhile remains on negative watch with possibility of downgrade still hanging over it.

- S&P revised Financial Guaranty Insurance Co and holding company FGIC Corp to negative on its CreditWatch as principal owner PMI Group said that FGIC was no longer considered a strategic investment and that it (PMI) will not be contributing capital to FGIC.

- While BOE commented that ways of easing the credit strains were being explored by central banks including itself, it was quick and clear in saying that using public funds to buy mortgage backed securities from financial institutions was not part of its plans. That it was not inclined to pass the buck to taxpayers (from the banks) was quite clear, but whether other central banks may allude to this would be something that mkts are bound to speculate about given its statement, "The BOE is not, however, among those reported today to be proposing schemes that would require the taxpayer instead of the banks to assume the credit risk."

- Acting BOJ Governor Shirakawa said that the top priority at the moment was to address the turmoil in global financial mkts. He added that the economy and prices - both upside and downside risks - had to be analysed broadly; warned about the potential damage from a continued fall in the dollar. Shaky mkts, slowing global growth and high energy prices were highlighted as key risks to Japan's economy though the acting chief of BOJ said that Japan's economy will continue to expand moderately notwithstanding current slowing.

- Premier Wen Jiabao said that addressing inflation was a top priority. He outlined supply-side measures such as release of supplies of certain goods as a means of attaining price stability. He also said that price intervention might be necessary with respect to some key goods and services.

- S Korean President Lee Myung-Bak made a statement saying that containing inflation was a more urgent economic task than was spurring growth to the 7% target or creating more jobs.

- BOK has mellowed its stance on foreign-currency loans by lifting its ban (put in place last Aug) on rollover of these loans for a year. The ban last year aimed at curbing yen carry trades that was pressuring the USD/KRW and especially the JPY/KRW was removed as a sharp reversal of JPY/KRW downside has left many S Korean companies feeling the brunt of servicing these loans.

- BOT Asst Gov Suchada Kirakul said that tight global liquidity since the removal of capital controls has limited capital inflows to manageable amounts. Most of these inflows were into the bond mkt - about $100 mln per week.

- At the ASEAN + South Korea + Taiwan central bankers meet held in Jakarta on Fri and Sat, Asian central bank governors commented that strong domestic and regional demand was expected to mitigate the negative impact from a global slowdown. It was also noted that there was a need to strengthen surveillance, market supervision and cooperation to respond to financial mkt shocks.

- At the Taiwan Presidential election, KMT candidate Ma Ying-jeou trounced his rival Frank Hsieh of the DPP, ending a period of 8-yr rule by the DPP. A KMT victory is expected top warm cross-straits ties and expected to see more benefits from linkages with China. Expect a rally on Taiwanese mkts and a heavy USD/TWD.

- Crude oil, $ 101.45, -$1.10.

Foreign Exchange: With the major mkts away for the Easter holiday the dollar was bound in tight ranges. The dollar index shuffled almost imperceptibly given the lack of major impetus or liquidity in the mkts. The EUR also traded sideways with a hint of softening bias. GBP was also moving in line with the EUR save for late buying that saw the EUR/GBP slip a little. Overall however, trades were very quiet with the lack of liquidity having accentuated some of the moves.

JPY crosses also suffered from the lethargy of quiet mkts. The GBP/JPY saw a slight uptick though consolidation was the underlying theme in trades that lacked both inspiration and direction. Some upside bias expected in the JPY after comments from the acting governor of BOJ which signalled that a rate cut could be in store sooner than later.

Both the AUD and NZD have been almost motionless as mkts are away for an extended Easter holiday. Hint of an upside in the AUD/JPY but the slight move could be more on the JPY end (BOJ comments) more than anything else.

US equity and bond mkts closed for Easter on Fri.

Asia Outlook: London mkt is still closed today for Easter though US mkts are expected to re-open today. With the dearth of cues from mkt closure for Easter on Fri, Asian bourses and currencies are expected to cautiously feel their way around in trades today. Cues are expected to be taken from the JPY stock mkts. Expect that that statement by the BOJ will support JPY crosses. However the negative outlook move on the US brokerage industry by S&P should keep overly risky bets off the table if not triggering a buy-back in regional pairings. Overall, USD/Regionals are expected to consolidate with risks skewed to the upside. Major mkts such as London are still closed for Easter Monday; in Asia Pacific, Australia, New Zealand and Hong Kong remain shut for Easter, and this should see quieter sessions.

NORTH ASIA

USD/KRW is seen weighed by the inflation bias stance of the President and BOK lifting the ban on yen loan rollover; both of which are seen as KRW positive moves. The sharp depreciation in the KRW has evoked these strong measures to help stabilize the KRW at more optimal levels. Expect that the USD/KRW will be sold down gapping lower in opening trades. The 1000 handle is seen being breached with 990 seen as the next support after retreat below 997.50. Bidders are seen emerging below 985 with strong support at 978.

USD/CNY is seen consolidating in the 7.0450-7.0625 range for now. The Easter long weekend which saw sideways trade in majors is expected see consolidation in the USD/CNY though appreciation bias in CNY should remain intact. With post reval lows of 7.0510 being printed on Fri (though the close was firmer), 7.05 is seen as the first support level. Break below the 7.0450 pivot should see selling down to the 7.04 figure level. While inflation should keep pressure on the USD/CNY, caution