Asian currencies lose ground as won and baht forced lower
Asian currencies lose ground as won and baht forced lower
HONG KONG (Dow Jones): Asian currencies lost ground Tuesday as
both the Korean won and the Thai baht dropped steeply against the
U.S. dollar.
Other regional markets saw relatively quiet trading, although
the Philippine peso mirrored the baht, falling back after failing
to push up through a key resistance level.
The won's fall was attributed to a flurry of position covering
by local market players who had earlier sold the U.S. dollar
short against the local currency.
Sentiment toward the won has been upbeat in recent days, as
market participants have responded favorably to the Korean
government's measures to avert a systemic crisis.
Observers had feared a liquidity squeeze Thursday, when retail
investors are expected to take advantage of an opportunity to
redeem funds in investment trust companies exposed to debt issued
by the financially stricken Daewoo Group.
But Korea's Financial Supervisory Commission said Tuesday it
expects redemptions to amount to no more than between 5 trillion
won to 7 trillion, well within the 17 trillion won of funding
already secured by the investment trusts.
By the end of local trading the buying had driven the U.S.
dollar up to 1,185.80 won, well above its earlier intraday low of
1,182.50 won and up from 1,183.40 won at Monday's close.
Dealers blamed the baht's fall on dollar purchases executed to
cover short positions in the U.S. currency.
According to a senior trader at one Thai bank, speculative
players in the offshore market had previously bought the baht in
reaction to reports that HSBC Holdings PLC is to buy a 40 percent
stake in Bangkok Metropolitan Bank, betting that the currency
would appreciate on the expected investment inflow.
At levels approaching 38.50 baht, however, the dollar met firm
demand from Thai corporate customers. Forced to buy dollars to
exit their positions, traders caught short drove the dollar up to
trigger stop-loss orders at 38.80 baht which in turn propelled
the U.S. currency up to 38.9600 baht late in Asian trading.
Late Monday the dollar had been quoted at 38.7550 baht.
The dollar's potential to make further short-term gains is
limited, however, according to the Thai bank trader, who said
that Thai exporters are looking to sell the U.S. currency at
levels above 39.00 baht.
The baht's fall was mirrored by the Philippine peso. After
strengthening in early trading, the peso fell back when the U.S.
dollar ran into firm customer buying interest below the 40.00
level.
By the end of the Manila trading session dollar buying had
driven the U.S. currency back up to finish at 40.180 pesos, up
steeply from its intraday low at 39.990 pesos and above Monday's
close at 40.085 pesos.
In other regional currency markets the Singapore dollar ended
flat, with little interest to trade the currency seen during
Asian hours.
Late in the day the U.S. dollar was quoted at S$1.6707,
compared with S$1.6705 Monday.
The Indonesian rupiah softened against the U.S. dollar, which
was supported by bids from customers onshore. Foreign investors
continued to hang back from the market, deterred, said traders,
by Y2K-related fears and nervous at the gathering momentum of the
Aceh secessionist movement.
Late in Asian dealing the dollar was quoted at Rp 6,855, up
from Rp 6,805 the day before.
T he New Taiwan dollar strengthened modestly despite central
bank intervention, as the market reacted to October's favorable
trade data, released Monday.
At the close of local trading the U.S. dollar was quoted at
NT$31.758, down from NT$31.763 the previous day.