Asian currencies down late, Thai baht hits 12-month low
Asian currencies down late, Thai baht hits 12-month low
SINGAPORE (Dow Jones): Asian currencies wilted late Wednesday on persisting regional political anxieties, the dollar's gains versus the Japanese yen and concerns over lofty oil prices, dealers said.
The Thai baht sank to its lowest level in almost 12 months earlier in the day, while participants tested the Monetary Authority of Singapore's resolve as they pushed the Singapore dollar lower.
"There is a clear crisis of confidence in Southeast Asia, and it's hard to see anything (but) Southeast Asian foreign exchange weakness, other than in the form of brief bouts of profit- taking," Bank of America said in a report.
The Thai currency pierced through its recent low of 41.63 baht to the dollar, which it touched at the end of July, and made a stab at 41.70 baht, its lowest level since end-September, 1999.
Dollar-selling by Thai banks and a large U.S. bank, however, stymied the baht's gains, dealers said.
Around 0800 GMT, the dollar was at 41.655, up from 41.45 baht late Tuesday.
"The dollar should be on its way to 41.80 baht before it hits 42 baht, and then 42.50 baht by the end of the year," a dealer at a Thai bank said.
Investors are expected to become increasingly nervous as Thailand's general elections, expected to be held in the fourth quarter, approaches, currency watchers said.
After sinking below the psychological support level of Rp 8,700 to the dollar, an explosion which rocked the Jakarta Stock Exchange accelerated the Indonesian currency's slide toward the end of the Asian trading day.
Around 0850 GMT, the dollar was at Rp 8,775, up from Rp 8,560 late Tuesday.
Fears the international community would isolate Indonesia if it fails to quell the violence in West Timor had also cast a shadow on the rupiah.
Earlier in the day, economics chief Rizal Ramli attributed the rupiah's losses to the diplomatic fallout from last week's killings of United Nations workers in West Timor and a weakening of regional currencies, adding that the weakness was temporary.
But the Indonesian currency won't likely find any respite in the short term, with many participants in Singapore betting that the beleaguered currency would spiral lower toward Rp 8,800-Rp 8,900, dealers said. Banks in Singapore were pushing the rupiah lower, they added.
And despite the looming threat of intervention by the Monetary Authority of Singapore and the city-state's strong economic fundamentals, the Singapore dollar wasn't spared from the slump in the region.
The U.S. dollar climbed to S$1.7445, from S$1.7390 late Tuesday. The U.S. dollar is expected to face stiff resistance around S$1.7450, dealers said. Even if it breaks that level, stop-loss selling expected around S$1.7480 will likely curb the U.S. currency's rise, a European bank dealer said.
Despite the bearish undertone, some analysts warned against pushing the Singapore dollar and some of the other Southeast Asian currencies much lower at current levels.
"We are wary of the market getting too ahead of itself," said Mansoor Mohi-uddin, a regional currency strategist at UBS Warburg, adding that any good news could prompt the market to liquidate their long dollar positions.
In Manila, intervention by the Philippine central bank limited the peso's losses. The dollar ended Wednesday at 45.69 pesos, up from 45.60 pesos Tuesday.
Elsewhere, the New Taiwan dollar closed at an eight-month low, thanks to U.S. dollar-buying in the non-deliverable forward market and volatility on the local bourse, dealers said.
The U.S. dollar ended at NT$31.112, up from Monday's close of NT$31.095. Financial markets were closed Tuesday for a national holiday. Wednesday's finish was the lowest level since Dec. 30, 1999, when the New Taiwan dollar closed at NT$31.395.