Asian currencies hold on, U.S. dollar falls out of favor
Asian currencies hold on, U.S. dollar falls out of favor
SINGAPORE (Reuters): Southeast Asian currencies held their ground yesterday as the U.S. dollar fell out of favor after Wall Street's historic drop overnight.
Wide spreads and thin volumes exaggerated volatility, but dealers said most Asian currencies kept their cool after an expected sell-off on the back of diving regional stock markets failed to materialize.
Still, there was little respite for frightened investors as stock markets from Karachi to Sydney reeled from the impact of the Dow's 554-point drop, its biggest single-day point loss.
The dollar, fragile after the Dow's plunge, fell sharply against the mark and yen during Asian hours, prompting players to reduce their dollar holdings against regional currencies too.
"Instead of selling regional currencies due to the fall-off in the stock markets, people were buying them and selling the U.S. dollar instead because the Dow has fallen," said Jacqueline Ong, regional economist at research firm I.D.E.A.
"But we're not sure whether this will be sustainable. We see more pressure building up," she added.
The Malaysian ringgit was at 3.4150/250 to the U.S. dollar at 0930 GMT after diving to a record low of 3.4600 earlier.
Talk that a large Singapore investment house had recommended buying the ringgit below the 3.40 to the dollar level helped prop up the ringgit, dealers said.
"There were good names selling dollar/ringgit at 3.40/41. I think the market's long of dollars," a European bank dealer in Singapore said.
"I think the topside in the dollar/regionals has been seen. I would prefer to sell on rallies," she added.
The Korean won skidded through a series of record lows, closing at 957.60 to the dollar, the day's lowest permitted level and nearly two percent off its previous close at 939.90.
Pressure on the won mounted after Moody's Investors Service downgraded Seoul's foreign currency ceiling for short-term debt.
The Taiwan dollar ended at a 10-year low of T$30.80 against Monday's T$30.510 as players were spooked by stock market sales.
The Philippine peso ended slightly higher at 35.15 to the dollar after the central bank sold dollars through the day.
Manila traders said the central bank's efforts helped shield the peso from the stock market's traumas. The main share index lost 6.31 percent to end at a new four-year low of 1,740.18.
Central bank governor Gabriel Singson said the bank had asked commercial banks to cooperate in curbing speculation against the peso and to look at ways to lower interest rates.
The Singapore dollar was at 1.5780/95 to the U.S. dollar after touching a low of 1.5950. Dealers said there was talk the Monetary Authority of Singapore (MAS) had intervened in the forward market, supporting three-month swaps.
"It looks like the MAS is expecting and also accepting a weaker Singapore dollar. I wouldn't be surprised to see it at 1.60 or even 1.62 to the U.S. dollar," a local bank dealer said.
Dealers said the Singapore dollar was helped by a newspaper report that one of Singapore's Big Four banks, Overseas Union Bank (OUB), had raised short-term deposit rates by as much as two percentage points.
The Thai baht slipped to 39.10/20 to the dollar onshore against 38.45/38.55 late on Monday as importers sought dollars while exporters held back from selling them in the face of the market turmoil. The baht was at 38.95/05 to the dollar offshore.
The Hong Kong dollar dipped to 7.7310/50 to the U.S. dollar from 7.7285/35 five hours earlier as interest rates eased after the Hong Kong Monetary Authority (HKMA) added liquidity to the interbank system to counter pressure on the stock market.
Traders said the HKMA offered overnight money at six percent, one-week money at 12 percent and three-month at 13.5 percent.
Hong Kong Chief Executive Tung Chee-hwa said his government was optimistic about the stock market, blaming Tuesday's drop on plunging overseas markets. He also said the Hong Kong dollar was likely to stabilize as currency speculators had retreated.
The Australian dollar pulled back from a 46-month low of US$0.6820 as rumors of Reserve Bank intervention unnerved a very short market.
The Aussie dollar's rebound helped the New Zealand dollar recover from a three-year low of 0.6145.