Asian currencies down in thin trading
Asian currencies down in thin trading
SINGAPORE (Reuters): Asian currencies were mostly weaker in thin pre-holiday trade yesterday after Moody's Investors Service downgraded the sovereign debt of four countries -- three of them to junk bond status.
Moody's said it had downgraded the foreign currency ceiling for bonds and bank deposits of Indonesia, Malaysia and South Korea in view of Asia's continuing financial woes. It also downgraded Thailand's foreign currency ceiling for bonds and confirmed the ceiling for bank deposits.
News of the downgrades, which would ordinarily have sparked a selling spree in bearish Asian currency markets, caused little more than a hiccup as most players had closed their books and were unwilling to commit themselves before the end of the year.
In South Korea, the won ended at 1,715 to the dollar against Friday's 1,550, depressed by Moody's move and importer demand for dollars in a market short of the U.S. currency.
Dealers dismissed the Finance Ministry's efforts to liberalize foreign investment in bonds of state and state-run companies and in short-term corporate bonds.
"Who would buy bonds in a country whose credit ratings have fallen to a junk bond level," said one foreign bank dealer.
The Taiwan dollar ended at T$32.603 per U.S. dollar against a previous T$32.374 close due to the U.S. dollar's overall strong tone.
The Hong Kong dollar and forwards were steady in slow trade.
Most Southeast Asian currencies looked soft, but dealers said they expected range trading due to a lack of participation.
The Indonesian rupiah outshone its regional counterparts, firming to 5,050/100 to the dollar at 1050 GMT against early levels of around 5,200/5,250 despite the Moody's downgrade.
The Thai baht slid to 47.00/20 per dollar onshore against 45.90/46.30 late on Friday on corporate demand for dollars. The offshore rate was at 44.70/45.20 against 45.05/45.45.
News of Moody's downgrades of Thailand's foreign currency ceiling for bonds to a junk bond grade had very limited impact as players had expected the worst and some companies had already closed their books for the year.
The Singapore dollar remained weak at 1.6750/80 to the U.S. dollar against 1.6710/40 on Friday. Dealers said there was no sign of the de facto central bank after last week's apparent interventions, which rescued the currency from six-year lows.
The ringgit slipped to a low of 3.8680 to the dollar after ratings downgrades of Malaysia's sovereign debt and selected companies. Dealers said its drop was exaggerated by very poor liquidity.
The Philippine peso closed at 40.08 to the dollar from Friday's 39.540 close as demand for dollars rose after the central bank suspended its intervention.
The Bankers Association of the Philippines said it would temporarily stop selling dollars to the central bank, effective Tuesday, cutting off supply to a pool of funds meant to stem the peso's slide by providing dollars for companies in need of them.
Traders said the plan had proved ineffective, partly due to the heavier than expected demand for dollars.