Asian currencies gain on American dollar's pullback
Asian currencies gain on American dollar's pullback
SINGAPORE (Dow Jones): Asian currencies were firmer on the dollar's pullback against the Japanese yen, but they stayed within familiar ranges as investors awaited Federal Reserve Chairman Alan Greenspan's Senate committee testimony, dealers said.
The Indonesian rupiah closed slightly higher in thin trading Tuesday due to persistent dollar selling by state banks, dealers said.
The dollar closed at Rp 9,599, down from Rp 9,615 at Monday's close.
State banks, which were believed to have acted on behalf of the central bank, started selling the dollar immediately after trading opened, dealers added.
"I think they wanted to set the dollar direction downward by selling the dollar right after trading opened," said a dealer with a local bank.
But, the dollar found strong support near IDR9,580 as local companies still need to buy the unit to pay offshore obligations. Dealers said overall trading was quiet as the market lacked fresh news to trade on.
They expect trading to remain quiet Wednesday and forecast the dollar to be remain in a narrow range of between Rp 9,580 and Rp 9,610.
Investors, wondering how quickly the slowing U.S. economy might rebound following the Fed's two aggressive half-point interest rate cuts in January, are looking for clues in Greenspan's testimony before the U.S. Senate Banking Committee at 1500 GMT (10:00 a.m. EST) Tuesday.
"It is difficult to determine whether the testimony will be positive for the dollar, but our line call is that it will be, as it is likely to raise hopes of a rebound in growth in the second half of 2001," said Peter Redward, a regional currency strategist at Deutsche Bank.
"Asian currency markets appear to be rangebound in advance of this important speech," he said.
Market participants were also noncommittal ahead of the publication of U.S. January retail sales data, which is due to be issued one-and-a-half hours before Greenspan's testimony.
Still, foreign equity fund inflows and the yen's gains lifted the South Korean won and the New Taiwan dollar, dealers said.
The South Korean won was the bigger gainer, as offshore banks "overweight in dollar-won" closed out their positions in the non- deliverable forward market, said a market watcher.
The dollar finished at 1,255.00 won, down from 1,264.30 won Monday.
The New Taiwan dollar relinquished its gains to end in negative territory, as foreign equity funds flowed out of the local bourse late Tuesday and as local importers bought the U.S. currency, dealers said.
The U.S. dollar closed at NT$32.334, up from NT$32.318 Monday. At 0840 GMT, the dollar was quoted at Y117.19, below Y117.50 late Monday in New York. The dollar was at Y117.79 late Monday in Singapore. Tokyo financial markets were closed Monday for a national holiday.
The Singapore dollar strengthened to S$1.7453 against its U.S. counterpart, from S$1.7473 late Monday.
Participants were unwilling to take aggressive positions ahead of the Monetary Authority of Singapore's much awaited statement on its monetary policy, expected next week, dealers said.
The de facto central bank is widely expected to change to a neutral policy bias, from its current mildly tightening stance.
In the Thai currency market, the dollar fell to 42.40 baht from 42.65 baht late Monday.
A meeting between the Thai central bank and commercial bank Treasury departments scheduled for Friday fueled rumors the central bank might step up the reporting requirements for foreign exchange transactions, which would allow it to better monitor flows and enforce restrictions on baht supply to offshore speculators, dealers said.