SE Asian currencies up amid cautious optimism<\/p>\n
SINGAPORE (Dow Jones): For the first time in months, some
\nmarket players were daring to take a bullish view on Southeast
\nAsian currencies, as late yesterday regional foreign exchange
\nmarkets ended a week of choppy trading significantly higher
\nagainst the U.S. dollar.<\/p>\n
A happy confluence of forces, including a stronger yen, lower
\nThai interest rates and the International Monetary Fund's
\napproval of extra assistance funding for Indonesia all boosted
\nsentiment toward the region's currencies, which are set to
\nappreciate further in the coming week, according to traders and
\nanalysts.<\/p>\n
\"Obviously markets will continue to take their cue from the
\nyen, but in a way that's unfortunate because internal economic
\ndynamics in Southeast Asia are changing,\" said Vincent Low,
\ncurrency and fixed income strategist at Merrill Lynch in
\nSingapore.<\/p>\n
As evidence that the foreign exchange market may be undergoing
\na change of heart, traders pointed to the baht, which rose
\nagainst the U.S. dollar in Asian trading despite tumbling
\ninterest rates in both the onshore and offshore markets.<\/p>\n
Even as recently as a few weeks ago speculative players would
\nhave taken advantage of any softening in offshore interest rates
\nto borrow baht in order to sell the currency short. But not any
\nmore, say traders.<\/p>\n
Far from spinning into a free fall, however, the baht actually
\nedged higher on the day. Late in Asia the U.S. dollar was quoted
\nat 40.5650 baht, down from 40.6150 baht the day before.<\/p>\n
\"Some people are bearish on the baht because the Bank of
\nThailand has been injecting liquidity into the system to bring
\ninterest rates down, but the simple truth is that customer
\ninterest to short the baht has dried up and without customer
\ninterest, there is no driving force to push the currency lower,\"
\nsaid a baht trader at a U.S. bank in Singapore.<\/p>\n
Sentiment has also improved toward the Philippines, which,
\nlike Thailand, is believed to have reached the bottom of its
\neconomic downturn. On the Philippine Dealing System, the U.S.
\ndollar ended Friday's session at 41.49 pesos, down from 41.65
\npesos at the previous close.<\/p>\n
The market is looking more kindly on the rupiah, too, after
\nthe IMF on Thursday approved an additional standby credit
\nfacility for Indonesia worth an extra $1.3 billion.<\/p>\n
\"Once the IMF dollars start flowing, Bank Indonesia will be
\nable to replenish its reserves and take some of the pressure off
\nthe local banking system,\" said the head of regional currency
\ntrading at a Japanese bank in Singapore.<\/p>\n
Lacking credit lines to offshore banks, Indonesian banks in
\nsearch of U.S. dollar funding had been forced to buy the U.S.
\ncurrency in the spot market. Now with the promise of funds from
\nBank Indonesia, the local banks have turned dollar sellers.<\/p>\n
\"The rupiah will be back at 10,000 (rupiah to the dollar) by
\nthe end of August,\" asserted the Japanese bank trading chief.<\/p>\n
The run-up in the rupiah also served to boost the ringgit,
\nand, briefly, the Singapore dollar.<\/p>\n
The market remains wary of more corporate failures in
\nMalaysia, and little good news is expected to emerge from Finance
\nMinister Anwar Ibrahim's current visit to the U.S.<\/p>\n
Although the ringgit will continue to benefit from any further
\nstrengthening in the yen or the rupiah, most see the currency
\nweakening over the longer term.<\/p>\n
Late yesterday the U.S. dollar was quoted at 4.0925 ringgit,
\ndown from 4.1095 ringgit the day before.<\/p>\n
The Singapore dollar, too, found some initial support from the
\nmarket's general bullishness on regional currencies. The currency
\ndropped back sharply in late trading yesterday, however, on what
\ntraders attributed to position squaring, although they added that
\nthe Monetary Authority of Singapore had earlier been buying the
\nU.S. dollar to check the local currency's rise.<\/p>\n
Late yesterday the U.S. dollar was quoted at S$1.6925, up from
\nS$1.6860 towards the close of Asian trading on Thursday.<\/p>\n
In North Asia, the new Taiwan dollar finished a little higher,
\nwith the U.S. dollar closing at NT$34.323, compared with
\nNT$34.362 on Thursday.<\/p>\n
With the Seoul market closed for a holiday, no trading took
\nplace in the won. But after a week in which the South Korean
\ncurrency rose by 2.5 percent, buoyed up by a ballooning current
\naccount surplus, many analysts expect the won to continue to
\nrise, with the U.S. dollar dropping to 1,250 won), compared with
\n1,284.50 won at Thursday's close.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/se-asian-currencies-up-amid-cautious-optimism-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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