Asian currencies under pressure from falling yen<\/p>\n
SINGAPORE (AFP): Asian currencies are expected to slide this
\nweek against the U.S dollar in line with the yen, with bearish
\ndomestic factors pushing the decline even further, analysts said.<\/p>\n
Foreign exchange markets across the region will also be
\nclosely watching the situation in Brazil, where the central bank
\nintervened in the market for the fourth consecutive day on Friday
\nto protect the embattled currency, the real.<\/p>\n
The yen fell at the end of last week even after US Deputy
\nTreasury Secretary Lawrence Summers warned that Japan could not
\nuse foreign exchange policy -- a weaker Japanese currency -- to
\ncure its economy.<\/p>\n
The yen plunged to a low of 121.05 against the greenback in
\nAsian trading Friday before short covering pulled it higher to
\n119.10 in New York.<\/p>\n
\"The assumption is that the dollar is going to remain on a
\nbullish track against the yen because it is apparent that
\nJapanese officials want the yen to be weak ahead of Japan's
\nfiscal year ending March 31,\" said John Lilley, director of
\nanalysis at Standard and Poor's MMS in Singapore.<\/p>\n
Speculation remains rife that Tokyo preferred a weaker yen to
\nboost exports and this could put pressure on Asian exports
\ncompeting with Japanese products, and eventually push China into
\ndevaluing its yuan, analysts say.<\/p>\n
\"That (a weaker yen) in turn will weigh on other Asian
\ncurrencies,\" Lilley said. Some are looking at the yen dipping to
\nas low as 125 by March end.<\/p>\n
Most Asian currencies ended the week lower against the US
\ndollar compared to the previous week's close.<\/p>\n
The Singapore dollar ended Asian trading Friday at 1.7255
\nagainst the greenback, the Thai baht at 37.40, the Indonesian
\nrupiah at 8,820, the South Korean won at 1,223, the Taiwan dollar
\nat 33.055 and the Philippine peso at 39.12.<\/p>\n
Analysts and officials warn that a declining yen taking a toll
\non other Asian units could hinder recovery of turmoil-wracked
\nregional economies.<\/p>\n
\"While our domestic credit crunch has eased, we remain very
\nconcerned in the weakening of the Japanese yen -- that it could
\naggravate the credit crunch in the region,\" Kim Kihwan, South
\nKorean ambassador at large for economic affairs, told a forum in
\nManila last week.<\/p>\n
Further weakness in regional units could force up interest
\nrates, sparking a renewed credit crunch.<\/p>\n
Analysts say domestic economic problems could add pressure to
\nthe already-vulnerable regional currencies.<\/p>\n
In Indonesia, Lilley said, a delay in the announcement on the
\nnumber of banks to be shut down had created \"market pessimism,\"
\nadding that the rupiah could test the 9,000 level against the
\ndollar.<\/p>\n
Jakarta on Friday delayed the closure of up to 40 banks for
\ntwo weeks, saying it needed more time to evaluate the situation.<\/p>\n
\"Such a delay may hinder any hopes of viewing Indonesia in any
\nfavorable way,\" said the ANZ Investment Bank in a bulletin to
\nclients.<\/p>\n
With the Indonesian banking sector in a crippled state, the
\ncrucial link to boost economic activity was lost, it said.<\/p>\n
\"Further, the frequent wavering on the part of officials in
\nIndonesia does not sit well with investors who are already
\nanxious about the country's social and political risks,\" ANZ Bank
\nsaid.<\/p>\n
The Singapore dollar was also expected to remain weak after
\ndeclining by more than one percent to the greenback last week.<\/p>\n
Some believe recession-hit Singapore did not mind a weaker
\nexchange rate to further compliment the island economy's drive to
\nlower costs.<\/p>\n
ANZ Bank said near-term fluctuations of the Singapore dollar
\nwould mainly be led by greenback-yen movements.<\/p>\n
The baht also remained vulnerable as Thailand succumbed to its
\nfirst balance of payments deficit in January after four straight
\nmonths of surplus.<\/p>\n
It \"was a disappointment and could be a warning bell for the
\nauthorities,\" ANZ Bank said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/asian-currencies-under-pressure-from-falling-yen-1447893297",
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