SE Asian monies quiet as ringgit issues dominate<\/p>\n
SINGAPORE (Dow Jones): Activity in Southeast Asia's foreign
\nexchange markets was muted on Friday, as participants grappled
\nwith the problem of untangling their ringgit exposure before Bank
\nNegara's September 9 deadline for the settlement of outstanding
\npositions.<\/p>\n
And regional currency markets are likely to remain quiet into
\nthe coming week, said traders and analysts, as settlement
\nproblems continue to monopolize attention, at least until the
\nmiddle of the week.<\/p>\n
At the end of Asian hours on Friday, the Singapore dollar was
\ntrading higher on the day, boosted by the overnight rise in the
\nJapanese yen. The baht and the Philippine peso, however, both
\nclosed lower, pushed down by domestic influences.<\/p>\n
In North Asia, the announcement by credit ratings agency
\nMoody's Investors Service that it was placing on review for
\npotential downgrade the foreign currency debt ratings of both
\nChina and Hong Kong had relatively little impact on trading in
\nforeign exchange markets.<\/p>\n
The settlement problems arising from Malaysia's decision last
\nTuesday to impose stringent capital controls on ringgit flows are
\nset to dominate regional markets for the immediate future, to the
\nexclusion of almost all trading activity, say participants.<\/p>\n
\"It is impossible to decide what will happen next week,\" said
\nthe head of regional spot foreign exchange at one U.S. bank in
\nSingapore.<\/p>\n
\"What happens on Monday, Tuesday and Wednesday will be
\ncritical. Banks will be monitoring their cash flows very
\ncarefully.\"<\/p>\n
After Malaysia followed up the introduction of capital
\ncontrols with a decision on Wednesday to peg the ringgit to the
\nU.S. dollar at an exchange rate of 3.80, banks offshore in
\nSingapore agreed to settle outstanding exposures among themselves
\nin U.S. dollars without involving Bank Negara.<\/p>\n
All outstanding positions, including ringgit deposits, are to
\nbe netted out between the banks with the residual exposure
\nsettled in U.S. dollars at an exchange rate of 4.00 ringgit to
\nthe U.S. dollar. Forward contracts will be settled according to
\nthe forward curve prevailing at the same time.<\/p>\n
Not all market participants are satisfied with the deal,
\nhowever.<\/p>\n
One senior executive at a European bank admitted to spending
\nthe entire day on Friday explaining to irate ringgit depositors
\nwhy they should pay a 5 percent penalty by accepting an exchange
\nrate of 4.00 instead of the 3.80 available onshore.<\/p>\n
\"It was easy reaching an agreement between the interbank
\nplayers in the offshore market, but clearly, corporate clients
\nand the banks onshore are talking another language,\" lamented the
\nU.S. bank's foreign exchange chief.<\/p>\n
Although trading is expected to be muted throughout the coming
\nweek, the political turmoil in Malaysia following the sacking on
\nWednesday of Malaysian Finance Minister and Deputy Prime Minister
\nAnwar Ibrahim is likely to weigh on the Singapore dollar, said
\ntraders.<\/p>\n
While further yen strength could boost the Singapore currency,
\nthe U.S. dollar is likely to be firmly supported above S$1.70,
\nthey said.<\/p>\n
In the longer term, any damage inflicted on the Malaysian
\neconomy by the adoption of capital controls will have
\nrepercussions on Singapore's economy, potentially pushing the
\nU.S. dollar as high as S$1.85 to S$1.90, according to traders at
\none U.S. bank.<\/p>\n
Late in Asian trading on Friday, the U.S. dollar was quoted at
\nS$1.7515, down from S$1.7609 towards the end of Asian hours on
\nThursday.<\/p>\n
Meanwhile, both the baht and the Philippine peso eased back on
\npoor sentiment towards the region in general.<\/p>\n
On the Philippine Dealing System, the U.S. currency ended the
\nsession at 43.76 pesos, compared with 43.43 at the previous
\nclose.<\/p>\n
Dollar sales by offshore funds keen to cut their positions in
\nregional markets are likely to cap the U.S. dollar's rise against
\nthe Thai currency at 41.00 baht, however, while domestic demand
\nfor U.S. dollars should hold the U.S. currency above 40.00, say
\ntraders.<\/p>\n
Late in the Asian day, the U.S. dollar was quoted at 40.93
\nbaht, up from 40.80 the day before.<\/p>\n
Meanwhile, against the Indonesian currency, the U.S. dollar
\nended at 10,858 rupiah, little changed from 10,788 late on
\nThursday.<\/p>\n
In North Asian markets, the Korean won slipped on heavy
\ndomestic demand for U.S. dollars, while the new Taiwan dollar
\nended higher on sales of the U.S. currency by the central bank.<\/p>\n
Against the won, the U.S. dollar closed at 1,343 won, up from
\n1,341 won the day before.<\/p>\n
Against the Taiwan currency, the U.S. dollar ended at
\nNT$34.686, down from NT$34.746.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/se-asian-monies-quiet-as-ringgit-issues-dominate-1447893297",
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