Forward currency market booms in S'pore<\/p>\n
SINGAPORE (Reuter): Burgeoning interest in Southeast Asia's
\nhigh-yield currencies and heavy capital and investment flows into
\nthe region will boost Singapore's forward currency markets this
\nyear, dealers said yesterday.<\/p>\n
The bulk of the increase will be in exotic currencies, chiefly
\nthe Thai baht and the Indonesian rupiah.<\/p>\n
\"The most attractive thing about the baht and the rupiah is
\nthat they both hold high interest rates,\" said one senior forward
\ncurrency dealer with a large U.S. bank in Singapore.<\/p>\n
\"With the baht or rupiah you benefit from at least three to
\nfive percent carry (interest gain) compared to the U.S. dollar
\nwhen you hold their currencies,\" the dealer said.<\/p>\n
Dealers said the Thai baht had shown a particularly large rise
\nin trading volume. Other Asian currencies garnering interest were
\nthe Philippine peso, the Taiwan dollar and the Korean won.<\/p>\n
Forward currency transactions in Singapore comprised 2.8
\npercent of average daily turnover of US$105.4 billion for April
\n1995 or almost US$3 billion in total, the Monetary Authority of
\nSingapore (MAS), the republic's defacto central bank, said in a
\nreport in September.<\/p>\n
Forex industry sources said current trading volume for Asian
\ncurrency forward markets total close to US$6 billion daily in all
\nthe regional capitals combined.<\/p>\n
\"It is becoming much more active because people are taking
\npositions with strategic views on Asian currencies now,\" said a
\nsenior economist with a large investment organization.<\/p>\n
He said with the climate of low worldwide interest rates, more
\nstrategic funds were likely to maintain large open positions in
\nthe forward markets in exotic currencies such as the Thai baht
\nand Indonesian rupiah.<\/p>\n
\"They offer good rolling yields and there is relatively very
\nlittle risk in a low interest rate environment,\" he added.<\/p>\n
The liquidity is also reinforced by hedging from investors in
\nSoutheast Asia's equity markets and corporate investors, such as
\nregional importers and exporters, dealers said.<\/p>\n
\"Southeast Asia's trading volumes from inter-country trades
\nhave increased significantly, and we see more trade flows from
\nend-users impacting both the forward and forex markets,\" said a
\nU.S. bank dealer.<\/p>\n
Dealers said trading volume in forwards was still led by the
\nmajor currencies such as the dollar, yen and mark but Asian
\ncurrencies are fast catching up.<\/p>\n
\"In terms of volumes, it's mainly the majors, but in terms of
\ninterest as a bank, our focus is on Asian currencies (during
\nAsian trading hours),\" said Chris Moser, Asian interest rate
\ntrader with SBC Warburg in Singapore.<\/p>\n
\"The interest in Asian currencies is very high and it is here
\nto stay,\" he said, adding that most foreign banks in Singapore
\nhave switched their trading focus from trading in the major
\ncurrencies to Asian exotics which have a higher risk premium
\nattached.<\/p>\n
Not only are overall volumes increasing, but position sizes
\ntaken by investors and speculators in the forward market are also
\ngrowing, dealers said.<\/p>\n
\"It is a natural development for a market that is growing,\"
\nsaid a senior currency strategist with a large U.S. bank in
\nSingapore.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/forward-currency-market-booms-in-spore-1447893297",
"image": ""
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"sponsor_url": "https:\/\/okusiassociates.com"
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