Asian currencies down late, cautious investors prefer dollars
Asian currencies down late, cautious investors prefer dollars
SINGAPORE (Dow Jones): Support for Asian currencies continued to erode Thursday with a host of negative external factors and domestic political concerns providing a bearish backdrop for the region's markets.
Asian currencies were universally weaker for the second day in a row as investors displayed their caution by stocking up on U.S. dollars, analysts said.
Stock markets across the region also tumbled Thursday on the heels of yet another poor performance by technology shares overnight on Wall Street.
The Indonesian rupiah ended lower in Asian trade Thursday, propelled within reach of its year low by concern over slow economic reforms, and the possible explosion of violence in Irian Jaya.
A stern letter from the International Monetary Fund to Indonesia, published in Thursday's Far Eastern Economic Review, hurt sentiment by highlighting the slow progress of reform in Indonesia.
Fears that the 39th anniversary Friday of a failed attempt by Irian Jayan separatists to secure independence could spark violence also turned investors off the rupiah.
The dollar ended trade in Asia at Rp 9,535 up from Rp 9,480 at Wednesday's close.
The U.S. unit climbed to an intraday high of Rp 9,540, a level at which investors said state banks began to sell dollars, possibly on behalf of the central bank.
Bank Indonesia has said it would defend the rupiah through limited intervention above 9,500, but the bank didn't confirm official action Thursday.
The IMF's concerns over the economy brought further opprobrium on Indonesia Thursday.
In a tersely worded letter dated Nov. 8, Anoop Singh, the Fund's Washington-based deputy director for Asia and the Pacific, demanded that Jakarta move decisively to minimize risks in its fiscal decentralization plan, use higher oil revenues to repay government debt and set a firm timetable for asset sales.
While most of Southeast Asia's currencies have faced selling pressure for most of this year, in the past few weeks the weakness has spread to the South Korean won and the New Taiwan dollar. The North Asian currencies fell to historic lows Thursday for the second consecutive session.
The won has been the region's hardest hit currency, losing 6 percent of its value against the U.S. dollar since Nov. 16. The New Taiwan dollar, meanwhile, is down 2.6 percent over the same period.
Against the won, the dollar closed at 1,214.3 won, up from 1,200.8 won late Wednesday. It was the dollar's strongest finish since Oct. 1, 1999, when it ended at 1,216 won.
"The won is still on very shaky ground," said Oh Suktae, currency analyst at Salomon Smith Barney/Citigroup in Seoul. "There may eventually be a correction but not until the dollar goes higher," he said, predicting the U.S. currency would hit 1,250 won next week.
In Taipei, the dollar finished at NT$33.046, its second straight close near a 20-month high. The dollar ended at NT$32.960 Wednesday.
Central bank intervention pushed the U.S. currency down in the last minute of trade from NT$33.197, the session's intraday high.
Corporate demand for dollars kept the Thai baht under pressure. Late in Asian trade the dollar was quoted at 43.855 baht after hitting an intraday high of 43.940 baht in early in the session. The dollar was 43.740 baht late Wednesday.
The Singapore dollar fell against the U.S. dollar, tracking other Asian currencies lower.
Late in Asia the U.S. dollar was quoted at S$1.7573, up from S$1.7564 late Wednesday.
The Philippine peso wasn't traded because markets in Manila were closed for a public holiday.