Yen fall drags SE Asian currencies<\/p>\n
SINGAPORE (Dow Jones): Dashing hopes of a reprieve for
\nSoutheast Asian foreign exchange markets, the yen dropped afresh
\nin Asian trading hours on Wednesday, dragging regional currencies
\ndown with it.<\/p>\n
As the U.S. dollar broke up through the key 140-yen barrier
\nfor the first time since the U.S. Federal Reserve intervened to
\nsupport the yen a week ago, the Singapore dollar, the ringgit,
\nthe baht and the Philippine peso all fell in line with the yen.<\/p>\n
And with the market's attention clearly focused on unfolding
\nevents in Japan and China, there is little prospect of Asia's
\nregional currencies breaking their fateful link with the Japanese
\ncurrency, say analysts and traders.<\/p>\n
\"The dominant influence on regional currencies will continue
\nto be the direction of the yen,\" said Paul Alapat, regional
\neconomist at Indosuez W.I. Carr Securities in Singapore. \"In term
\nof domestic influences, on a two-week perspective there is really
\nnothing major to balance the effect of the yen's movements.\"<\/p>\n
The right policies at this stage include maintaining monetary
\ntightness, said Rajeev Malik, regional economist at Jardine
\nFleming in Singapore. No matter how strident the domestic calls
\nto lower interest rates and relieve the pressure on corporate
\nsectors, governments have no choice but to keep rates high if
\ncapital flight and snowballing currency depreciation are to be
\navoided, he says.<\/p>\n
It's too early to remove the support of high interest rates
\nyet. The best we can hope for is that more orderly foreign
\nexchange markets in the second half of the year will gradually
\nopen up room for a more discretionary monetary policy stance,\"
\nagreed Alapat at Indosuez.<\/p>\n
Even granted stability in the yen, there is little prospect of
\na recovery in Southeast Asian currencies, argues Alapat, who is
\ntargeting year-end rates of around S$1.80, 4.5 ringgit Malaysian
\nringgit and 45 Thai baht to the U.S. dollar.<\/p>\n
Others in the market agree with this bearish stance, and
\ncontinue to search for levels at which to sell regional
\ncurrencies short.<\/p>\n
Market participants, he explained, are still trading the
\nSingapore and the Malaysian currencies as proxies for other less
\nliquid regional currencies, including the rupiah, which he
\ndescribed as a \"virtual currency,\" it is so thinly traded.<\/p>\n
\"All the optimism and pessimism towards the region is
\nreflected in the Singapore dollar and the ringgit, and net-net,
\nthe market is still very pessimistic on Southeast Asia,\" he said.<\/p>\n
Late in Asian trading on Wednesday the U.S. dollar was quoted
\nat S$1.6503, down from its early afternoon intraday high of
\nS$1.6630, but still up from S$1.6378 in late Asian trading the
\nprevious day.<\/p>\n
Against the ringgit the U.S. currency was at 3.9525 ringgit,
\nup from 3.9210 ringgit late in Asia on Tuesday.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/yen-fall-drags-se-asian-currencies-1447893297",
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