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.