Asian currencies end mixed as RI scandal roils markets
Asian currencies end mixed as RI scandal roils markets
SINGAPORE (Dow Jones): Continued yen strength offset market uncertainty created by Indonesia's ongoing bank scandal and domestic reaction to the decision to allow international peacekeepers into East Timor, leaving the U.S. dollar mixed against the region's currencies late Tuesday.
The uncertainty pushed the Thai baht to an 11-month low against the U.S. dollar in early trading, although the yen's continued strength allowed the baht to claw back some of its losses. The Singapore dollar moved higher against the U.S. dollar, while increasing fears of inflation put downward pressure on the Philippine peso.
The Indonesian rupiah fell only slightly against the U.S. dollar in an extremely thin market, even after World Bank Director Mark Baird said the scandal involving an illegal transfer of funds from Bank Bali is probably not an isolated incident.
In North Asia, the New Taiwan dollar strengthened slightly, while the Korean won weakened, despite forecasts that economic growth could hit 8 percent in 1999.
Economists expect a strengthening yen to take the pressure off central banks in coming weeks and months. Philip Wee, treasury economist at Standard Chartered Bank in Singapore, said regional currencies can also be expected to appreciate somewhat as the U.S. dollar weakens.
"The U.S. dollar is at a critical point against the yen; the market is expecting Y100, but no one knows how fast, and Bank of Japan intervention is also a factor," Wee said.
At 0820 GMT, the U.S. dollar was trading at Y106.51, well down from Y107.25 in late Asian trading Thursday.
The U.S. dollar was also trading at S$1.6878, down a touch from $1.6890 late Thursday. Traders said there were signs the Monetary Authority of Singapore was active in the market, trying to curtail U.S. dollar-selling. Despite MAS efforts, the market is still seeing bids starting at S$1.6840 and traders expect the U.S. dollar to fall further during European and U.S. trading hours.
On the Philippine Dealing System, the U.S. dollar was trading at 39.90 pesos in late Asian trading, up from 39.86 pesos Thursday.
Economists are beginning to voice fears the Philippines is well on the way to overshooting its budget deficit target, which could undermine confidence in the government.
Data released Tuesday showed the government recorded a budget deficit of 71.95 billion pesos in the first eight months of 1999. That already exceeds the full-year target of 68.4 billion pesos.
The U.S. dollar was also trading at Rp 7,950, up from Rp 7,850 in late Asian trading Monday, although the U.S. dollar did climb as high as Rp 8,190 in intraday trading. Traders complained the market is extremely thin with $1 million and $2 million orders going unfilled; the attendant volatility has kept most investors on the sidelines.
In other markets, the U.S. dollar climbed a touch higher against the Korean won, trading at 1192.1 won, up from 1191.8 won late Monday. Markets remained skeptical to news Monday that the government is close to finalizing a deal for Korea First Bank with U.S. investor Newbridge Capital Ltd., a move that, if true, will buoy foreign investor confidence.
The U.S. dollar, trading at NT$31.78 late Monday, fell to NT$31.765 Tuesday - a 21-month low against the new Taiwan dollar.