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.