Asia currencies drag their feet as yen steps up
Asia currencies drag their feet as yen steps up
SINGAPORE (Reuters): Asian currencies dragged their feet
yesterday as the benefits of a strong yen were tempered by demand
for cheaper dollars.
News of a long-delayed Malaysian bank merger and Indonesia's
apparent commitment to its IMF reform agreement kept regional
currencies well underpinned, but dealers said the dollar
continued to be sought on dips.
The Asian Development Bank's (ADB) annual report was largely
ignored by the sleepy market.
The ADB said Asia's battered economies would start to recover
next year, but would take several years to return to pre-crisis
growth rates.
The ADB said Indonesia, Thailand and South Korea would see
their economies shrink this year while Malaysia and the
Philippines would grow at a much slower rate.
In Malaysia, the ringgit pulled off its lows as the stock
market gained from overnight news of a deal between RHB Bank and
Sime Bank.
Rashid Hussain Bhd said it would pay 368 million ringgit for
Sime Bank's net tangible assets.
Deputy Prime Minister Anwar Ibrahim said he was happy with the
finalization of the deal, which had appeared on the verge of
falling through before Wednesday's announcement.
The Indonesian rupiah clambered back above the 8,000 per
dollar level on commercial dollar sales near its lows of 8,200.
Dealers said increased offshore placements in central bank
paper (SBIs) had lifted the rupiah and short-end swap rates.
In Jakarta, the rupiah closed at 7,925 against the American
greenback yesterday after it touched a day low of 8,200.
Local dealers attributed the failure of the rupiah to
strengthen to persistent demonstrations by university students
demanding President Soeharto make rapid economic and political
changes or step down.
"Investors are greatly worried that student demonstrations
will spread to the streets in the coming days causing activities
to halt," the dealer said.
In Thailand, the baht hovered around the 39.00 per dollar
level for most of the day, sandwiched between corporate dollar
demand and offshore offers.
In Hong Kong, a government financial review said the local
dollar's peg must be maintained and interest rates remained the
most potent weapon for defending it, despite the hardship
inflicted on residents.
The Hong Kong dollar was steady while forwards remained soft
on low short-term rates and the yen's strength.
The Singapore dollar slipped from its highs but held up after
breaching the 1.5850 barrier on stop-loss U.S. dollar sales.
The Philippine peso slipped on dollar buying in the parallel
foreign exchange market.
Dealers said foreign funds were shifting their portfolios out
of Philippine markets ahead of the May 11 presidential election,
which Vice President Joseph Estrada is tipped to win.
The South Korean won gained from the yen's rise, which spurred
banks to square long dollar positions though concerns about
possible labor unrest lurked in the background after a militant
union threatened to boycott talks with the government and
business.
The Taiwan dollar rose with the yen and on investor wariness
the central bank might defend it in the face of pressure from
recent data showing a falling exports trend.
In London, the dollar rose against the yen after Tokyo cooled
speculation of intervention to support the currency and London
stocks recovered from a lackluster start after soothing UK retail
sales data.
The dollar recovered early in Europe to 130.45 yen from an
earlier low of 129.91 but it was still marginally below
Wednesday's late European trading level.