Asian currencies end mixed, baht recovers from 11-month low
Asian currencies end mixed, baht recovers from 11-month low
HONG KONG (Dow Jones): Asian currencies enjoyed mixed fortunes on Friday.
The expected purchase of two Thai banks by foreign investors helped lift the baht, particularly in the cross market against the Singapore dollar.
At the same time, the Singapore currency lost ground against the U.S. dollar, in part because of the yen's consolidation.
The Philippine peso strengthened in anticipation of higher domestic interest rates, but the Indonesian rupiah dropped as flaring violence in East Timor unnerved the market.
In North Asia, the won rose in the last minutes of trading to close flat on the day, while the New Taiwan dollar continued to edge higher.
The Thai baht's recovery from the 11-month low it saw Thursday was attributed partly to the expected acquisition of Nakornthon Bank by Standard Chartered Bank and the proposed purchase of a stake in Radanasin Bank by Singapore's United Overseas Bank.
Dealers said Standard Chartered emerged as the market's main buyer of baht at the start of Asian trading Friday, forcing the U.S. dollar down from an early high of 38.8300 baht.
News of UOB's proposed purchase also spurred buying of the baht against the Singapore dollar, reinforcing the baht's rise, while pushing the Singapore currency down.
Position-covering by market players who went short the baht earlier in the weak helped propel the baht higher still, with the U.S. dollar falling to reach a mid-afternoon low of 38.6600 baht.
Towards the end of Asian trading, however, the U.S. dollar had recovered slightly, to trade at 38.7100 baht, compared with 38.8900 baht late the day before.
Commercial bids should lend support to the dollar over the coming week, while the U.S. currency will struggle to climb above the 39.0000 baht level, said traders, who predicted a short-term range of 38.60 baht to 38.90 baht.
The Singapore dollar is although thought likely to remain range-bound over the coming week, despite its fall Friday.
By late in Asian trading, the U.S. dollar had been pushed up to S$1.6878, from S$1.6832 the previous day.
According to one dealer at a local bank in Singapore, the U.S. dollar is unlikely to stray outside a S$1.6840 to S$1.6890 range in the short term, while remaining between S$1.6800 and S$1.6950 over a longer-time horizon.
The Philippine peso strengthened Friday, after the central bank emerged the victor in its policy struggle with the Philippine Treasury.
In recent weeks, the treasury has been in favor of massaging domestic interest rates lower, even at the expense of the peso, while the central bank has maintained that currency stability must take priority.
The debate appeared to have been settled Friday, when Finance Secretary Edgardo Espiritu said he expected treasury bill yields to rise at Monday's auction.
According to Prasenjit Basu, regional economist at Credit Suisse First Boston in Singapore, short-term interest rates are likely to climb by between 25 and 45 basis points to between 8.9 percent and 9.0 percent, reestablishing the stability of the peso, after its recent fall to 10-month lows.
At the close of local trading Friday, the U.S. currency was quoted against the peso at 39.740 pesos, down from 39.780 pesos the day before.
Relatively favorable August inflation and July trade figures failed to lend any support to the rupiah Friday, as dollar demand pushed the U.S. currency higher in a market depleted of players.
Many offshore banks, unnerved by the political uncertainties in Jakarta and the worsening violence in East Timor, said they would remain on the market's sidelines for the foreseeable future.
Late in Asian trading hours the U.S. dollar was quoted at Rp 7,820, up from Rp 7,707 the previous day
In North Asia a flurry of late U.S. dollar sales lifted the won off its earlier intraday low to close flat on the day.
Steven Xu, a treasury economist at the Standard Chartered Bank in Hong Kong, said that although developments in South Korea's corporate sector will continue to drive volatile swings in the dollar/won exchange rate over the coming week, the U.S. currency should remain within a broad 1,180 won to 1,200 won band.
At Friday's close, the U.S. dollar was at 1,190.50 won, the same level as at the end of Thursday's session.
The New Taiwan dollar ended little changed, closing at NT$31.823, down from NT$31.825 the day before in relatively light trading.