Asian currencies lower as U.S. funds dump regional stocks
Asian currencies lower as U.S. funds dump regional stocks
Tom Wright, Dow Jones, JAKARTA
Asian currencies weakened Friday as a selloff in Japanese stocks helped push the yen and regional bourses lower, setting the tone for the foreign exchange markets.
The direction for Asian currencies next week remains uncertain. Few players expect the U.S. dollar to sustain its rise while investors harbor concerns over the U.S. economy amid a loss of faith in corporate America.
But concerns over Asia's economic recovery are also starting to hurt the region's stocks, and this could dampen the outlook for regional currencies, analysts said.
"The Asian economy doesn't look very rosy as well...When the U.S. economy doesn't look good, it doesn't necessarily mean the dollar will get hit against Asian currencies," said Sameer Goel, a strategist at Bank of America in Singapore.
"It's a tough call for now. People are very undecided at the moment."
Asian stock markets declined Friday, mainly due to mutual funds selling holdings to raise cash at a time when the U.S. stock market is under intense pressure. Funds sold Japanese, and other Asian market stocks, giving a short-term boost to the U.S. dollar, traders said.
Concerns over the Asian semiconductor industry, which is failing to rebound as was thought a few months ago, also hurt stock markets in the region, especially South Korea, Taiwan and Singapore. Such fears mean Asian markets, and currencies, might continue to decline next week despite investor concerns over the U.S. economy.
South Korea's won was among the worst performing currencies against the U.S. dollar Friday. The U.S. unit closed at a three week high of 1,190.4 won, up from Thursday's close at 1,170.9 won.
The country's technology heavy stock market fell 3.6 percent to 697.84 points, its lowest closing level this year.
Many of the sales seemed to come from overseas fund managers repatriating funds, although there was also selling of semiconductor stocks on the poor industry outlook, traders said.
Most players were caught in short-dollar positions from Friday's decline in Asian currencies, sparking a round of short covering, traders said.
In Singapore, which also faced strong stock market declines Friday, the U.S. dollar was trading late at S$1.7589, higher than SS$1.7435 late Thursday.
The Philippine's central bank was rumored to have intervened in the market to slow the peso's decline Friday. The peso was also pushed lower by the news overhang that the government may overshoot its budget deficit target this year. The central bank declined to comment on the intervention talk.
The U.S. dollar closed at 51.30 pesos, higher than 50.660 pesos Thursday.
Indonesia's rupiah was lower amid stock market declines and U.S. dollar demand from local companies with huge overseas debt. It's estimated that local companies have to repay about US$5 billion in the last three quarters of this year, an overhang from the 1997-98 Asian financial collapse.
The government's successful raising of about $2 billion from the sale Wednesday of bad loans taken over from the banking sector after the crisis might give the rupiah some support next week, traders said. Offshore investors, including the original debtors themselves, are expected to move overseas funds into the rupiah to pay for the loans in coming weeks.
The dollar closed at Rp 9,150, up from its close Thursday at IDR9,000.
Against the Thai baht, the U.S. dollar ended the day at 41.77 baht, up from 41.07 baht at the close Thursday, in line with the regional trend.