Asian currencies down with U.S. economic slowdown news
Asian currencies down with U.S. economic slowdown news
SINGAPORE (Dow Jones): Most Asian currencies slipped late Wednesday, as data pointing to a sharp U.S. economic slowdown and regional political uncertainties weighed on sentiment, dealers said.
Investors are worried that falling global demand, led by a slowing U.S. economy, would hurt Asian technology exports, which drive most of their economies, especially South Korea and Taiwan.
A weaker-than-expected National Association of Purchasing Management's index released Tuesday, which indicated a sharp slowdown in the U.S. manufacturing sector, heightened concerns over the pace of the U.S. economic slowdown. The disappointing data stoked the overnight sell off on Wall Street, with the Nasdaq tumbling 7.2 percent.
Still, market participants are awaiting U.S. employment data due Friday for a clearer indication of the extent of the U.S. economic slowdown, since the NAPM figures have understated implied GDP in recent years.
In Southeast Asia, the Thai baht, the Indonesian rupiah and the Philippine peso were weaker. The Singapore dollar bucked the downtrend, thanks largely to corporate demand for the currency, dealers said.
The rupiah crept lower Wednesday in lackluster post-holiday trade as political and security worries continued to fuel dollar- buying.
Dollar strength against regional currencies also added to pressure on the rupiah, said dealers.
The dollar closed the Asian day at Rp 9,525, down from Rp 9,440 late Tuesday.
Dealers said the dollar is likely to edge higher this week and will test the rupiah's current support level at Rp 9,600, particularly if corporate dollar demand picks up after the holiday.
"But Bank Indonesia is still guarding the rupiah," said a foreign bank dealer, referring to central bank efforts to cap the dollar's rise.
The South Korean currency led the regional market's decline earlier in the day, when it fell 1.3 percent to an intraday low of 1,293 won against the dollar, its weakest level since Nov. 19, 1998. Dollar demand from importers added to the pressure on the won, dealers said.
But verbal intervention by the government and dollar-selling by Korea Development Bank, believed to be acting on behalf of the government, reversed the won's fortunes, dealers said.
The dollar finished at 1,270.10 won, down from Tuesday's close of 1,276.40 won.
Although intervention by the South Korean authorities has prevented the won from falling to 1,300 won against the dollar, market watchers said it would only be a matter of time before the currency hits that psychologically important level.
The New Taiwan dollar won't be unscathed either from the won's problems, even if Taipei's central bank continues to aggressively defend the local currency, analysts said.
Against the New Taiwan dollar, the U.S. currency ended at NT$33.033, up from Tuesday's close of NT$32.943.
On the Philippine Dealing System, the dollar, which was also supported by corporate demand, closed at 51.040 pesos, up from 51.000 peso Tuesday.
The Singapore dollar resisted the pressure from its regional counterparts, thanks to corporate investment flows linked to U.S.-based Solectron Corp's acquisition of local contract manufacturer NatSteel Electronics Ltd., dealers said.
Dollar profit-taking and the Singapore currency's strength helped the Thai baht recoup its earlier losses, although political uncertainties continued to lurk in the background ahead of Thailand's Jan. 6 elections, dealers said.
After trading above 43.700 baht earlier in the day, the dollar fell to 43.505 baht. Late Tuesday, the dollar was at 43.605 baht.