Asian currencies gain on fears of Thai forex ruling
Asian currencies gain on fears of Thai forex ruling
SINGAPORE (Dow Jones): The Japanese yen's vigor and Thailand's move to tighten disclosure requirements in foreign exchange dealings bolstered several Asian currencies late Wednesday, dealers said.
The Indonesian rupiah closed flat Wednesday as offshore players remained out of the market on political concerns.
Fears that President Abdurrahman Wahid is losing his grip on power after Parliament censured him last month in connection with two financial scandals is hurting sentiment.
"It like a time bomb and nobody wants to go short-dollar," a trader said.
The dollar ended Asian trading at 9,590 rupiah, unchanged from Tuesday's close. The dollar moved in a very tight range between Rp 9,590 and Rp 9,600 during the day.
Trading rules which ban the transfer of rupiah offshore have also killed speculative activity against the rupiah from foreign banks, traders said.
Local companies are also out of the market while they wait for the outcome of political developments.
The South Korean won, the Thai baht and the Singapore dollar were slightly firmer, and the Philippine peso and the New Taiwan dollar were weaker.
Federal Reserve Chairman Alan Greenspan's relatively more upbeat assessment of the U.S. economy Tuesday provided some relief for some currencies, like the Singapore dollar and the won, whose export-dependent economies are highly dependent on the U.S.
Greenspan's comments, however, didn't change expectations that the Fed will cut interest rates again at its March 20 policy- setting meeting, although some participants have lowered their forecasts for an aggressive easing.
The baht took centerstage, as offshore participants, led by U.S. investment houses, bailed out of their long-dollar positions. Bank of Thailand's move to standardize, and make more stringent, reporting formats of foreign exchange dealings by onshore banks had sparked fears - among some - that this could be a precursor to some form of foreign exchange curbs, dealers said.
"They just want to tighten up the disclosure requirements between onshore and offshore counterparties," said Mansoor Mohi- uddin, a regional currency strategist at UBS Warburg. "We don't think they're following Indonesia's footsteps and completely banning the offshore market."
The dollar fell to 42.370 baht, from 42.400 baht late Tuesday. Onshore corporate dollar demand cushioned the U.S. currency's decline, dealers said.
The central bank will hold a meeting Friday with commercial bank treasurers to explain the new disclosure requirements, which have perplexed dealers.
"I don't expect anything to come out of this, but nobody wants to be long and get caught high and dry," said a dealer at a European bank.
The yen's gains kept the Singapore dollar and the Korean won buoyed, dealers said. Local media reports that a top coalition politician had called for Japanese Prime Minister Yoshiro Mori to step down as premier supported the yen.
At 0950 GMT (4:50 a.m. EST), the dollar was quoted at Y116.58, below Y116.72 late Tuesday in New York. The dollar was at Y117.12 a day earlier in Tokyo.
The Singapore dollar was at S$1.7450 against its U.S. counterpart, down slightly from S$1.7453 late Tuesday.
In Seoul, the dollar closed at 1,252.3 won, compared with Tuesday's close of 1,255.0 won. Foreign equity fund inflows into the Seoul bourse contributed to the dollar's decline, dealers said.
Against the New Taiwan dollar, the U.S. currency closed at NT$32.387, up from NT$32.334 Tuesday.
The dollar closed at 47.955 peso on the Philippine Dealing System, up from 47.630 peso Tuesday.