Asian currencies drop sharply as yen falters
Asian currencies drop sharply as yen falters
SINGAPORE (Reuters): Asian currencies fell sharply yesterday, hit by concerted buying of dollars as the yen suffered from flagging confidence in Japan's economy and its ability to help the region.
The yen stayed under the weather in reaction to gloomy results from Japan's "tankan" survey, which tracks corporate sentiment, published late on Wednesday.
It was further hurt by remarks made on Thursday by Sony Corp chairman Norio Ohga, who said Japan's economy was on the edge of collapse and risked a long spiral of deflation.
"The Japanese economy is on the verge of collapsing. There is a general feeling of pessimism throughout the country," he told foreign reporters.
The quarterly tankan showed business confidence had plunged compared to the December survey.
"It reinforces (the view) that the Japanese situation is quite dire," said Andrew Fung, regional treasury economist with Standard Chartered Bank.
He said the market was worried that Japan was in no position to help other Asian economies in crisis.
Southeast Asian currencies, in particular the baht, renewed their descent after chalking up recent gains.
"The regionals are lacking direction and will look to the yen's movements, which will spill over," a dealer with an Asian institution said.
But the Indonesian rupiah was spared, partly due to thin interest ahead of expected government proposals to stabilize the rupiah.
It was also helped by Indonesia's new economic targets agreed with the International Monetary Fund (IMF), has which put together a US$43 billion rescue package for Jakarta.
The economic targets leaked on Thursday were a five percent decline in gross domestic product (GDP), a budget deficit around 3.5 percent, a current account surplus of close to three percent of GDP and inflation around 45 percent in 1998.
The rupiah stood at 8,525/625 per dollar at 1000 GMT against the previous day's 8,575/8,675.
In contrast, the Thai baht struggled to regain its poise after hitting 41 per dollar. Dealers said it sank against the dollar because much of the good economic news had already been factored in.
It was at 40.60/90 per dollar against late Wednesday's 39.05/130.
Dealers said selling of the baht might slow for now and could improve on dollar sales from exporters.
Over in Malaysia, the ringgit hovered in lower ranges on fresh dollar purchases by local and offshore players.
It drifted to 3.7500/50 against the dollar at 1000 GMT after rising off lows at 3.7625 earlier. The ringgit was at 3.6530/630 in the late Wednesday Kuala Lumpur market.
The Singapore dollar broke 1.6300 but revived in late action to 1.6280/90 per dollar.
In the Philippines, the peso was pulled lower by regionals and the yen, nudging past 40 per dollar at one point. It retreated to 38.95/39.05 per dollar against Wednesday's close of 38.22.
North Asian currencies were again under pressure from a dropping yen and the tankan.
The Taiwan dollar ended lower at T$32.887 against T$32.829 on Wednesday, reflecting the yen's fall against the dollar.
The Korean won also finished lower, hurt by dollar build-up sparked by views the greenback had struck bottom.
Weakness in forward trading rates also hurt spot won prices. It stumbled past 1,400 per dollar to close at 1,413 against Wednesday's 1,390 close.
The Hong Kong dollar was mildly weaker at HK$7.7490/00.