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.