SE Asian currencies flat as volatility dies<\/p>\n
SINGAPORE (Dow Jones): Southeast Asian currencies finished
\nAsian trading on Friday largely flat against the U.S. dollar at
\nthe end of a week notable mainly for an unaccustomed lack of
\nvolatility in regional foreign exchange markets at a time when
\nmarkets globally see-sawed with uncertainty.<\/p>\n
But with regional currency markets by-passed by investors and
\nwith liquidity dwindling to what traders say is among the lowest
\nlevels seen since the beginning of Asia's economic crisis over a
\nyear ago, there is little likely to lend new direction to
\nSoutheast Asian foreign exchange markets over the coming week.<\/p>\n
\"We have seen a period of tremendous volatility in regional
\nmarkets, and in the aftermath of that there is a lot of pain and
\na lot of risk aversion,\" said Vincent Low, a currency fixed
\nincome strategist at Merrill Lynch in Singapore.<\/p>\n
Having sustained heavy losses on their ringgit positions when
\nMalaysia imposed capital controls at the beginning of the month,
\nmany participants are hanging back from regional markets. Wary of
\nthe risk, however slight, that Indonesia and other Southeast
\nAsian countries may follow Malaysia's lead, few are prepared to
\ntake positions in regional markets.<\/p>\n
\"People are licking their wounds, and things are unlikely to
\npick up at least until the end of the month. There is a lot of
\nred ink around,\" said Ron Leven, local markets strategist at J.P.
\nMorgan in Singapore.<\/p>\n
Meanwhile in the run-up to the end of the quarter, said Leven,
\nuncertainty whether the U.S. Federal Reserve Board will cut
\ninterest rates at its Sept. 29, meeting and nervousness about
\npossible contagion from financial instability in Brazil and stock
\nmarket volatility on Wall Street will help deter players from
\ndabbling in Asian regional markets.<\/p>\n
\"Directional trades are lacking, because the future is so
\nunclear,\" agreed Low at Merrill Lynch.<\/p>\n
The market's lack of appetite for position-taking was clear on
\nFriday. Against the Singapore dollar, usually the most liquid of
\nregional currencies, the U.S. dollar ended Asian trading at
\nS$1.7200, little different from S$1.7169 late on Thursday and at
\nthe same level at which it started the week.<\/p>\n
Although there were still market participants keen to sell
\nU.S. dollars to cover their long positions against the local
\ncurrency, the Singapore dollar failed to rally significantly,
\nleading some traders to detect the presence of the Monetary
\nAuthority of Singapore.<\/p>\n
\"The MAS appears to have defined a range for the Singapore
\ndollar, and we are near the limits of that range now so the MAS
\nhas been in buying (U.S.) dollars,\" said the head of regional
\nforeign exchange trading at a major U.S. bank in Singapore.<\/p>\n
With little threat of imported inflation, the MAS is widely
\nbelieved to be keen to nudge the Singapore dollar lower in order
\nto boost export competitiveness.<\/p>\n
Activity in other regional currencies was also subdued on
\nFriday, with little price movement seen in either the baht or the
\nrupiah markets.<\/p>\n
Against the baht the U.S. dollar ended the day at 40.6250,
\nbarely changed from 40.6400 at Thursday's Asian close.<\/p>\n
\"There is some liquidity there. We are seeing about US$150
\nmillion to $200 million go through a day, but no-one wants to
\npush the market more than 20 satang either way,\" said the U.S.
\nbank trading chief, adding: \"It is very frustrating. How can we
\nmake a living without volatility.\"<\/p>\n
Trade in the rupiah was virtually non-existent, said market
\nparticipants. With proprietary traders still deterred from
\nentering the market by fears the Indonesian authorities may
\nimpose capital controls on the rupiah, transaction volume is
\nlimited to commercial order flow only, say dealers.<\/p>\n
Late in Asian trading the U.S. dollar was quoted at 11,175,
\nlittle changed from 11,075 the previous day.<\/p>\n
Activity in the Philippine peso market was more lively,
\nhowever, with the local currency sliding against the U.S. dollar
\nfollowing the announcement late Thursday that Philippine
\nAirlines, the national carrier, is to be wound up after
\nsustaining massive losses.<\/p>\n
Fears that the airline's collapse may pose a systemic danger
\nto the Philippine banking system, to which it is heavily
\nindebted, triggered a surge of U.S. dollar buying which pushed
\nthe U.S. currency up to close at 43.910 pesos. At Thursday's
\nclose the U.S. dollar was quoted at 43.785.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/se-asian-currencies-flat-as-volatility-dies-1447893297",
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