Asian currencies lower in quiet trade
Asian currencies lower in quiet trade
SINGAPORE (Reuters): Asian currencies closed a quiet day's trade yesterday drifting lower as the end of the fiscal year for many companies approached, while most traders awaited fresh developments from Indonesia's talks with the International Monetary Fund.
Dealers also said they feared that regional currencies, which have fared well against the dollar in recent weeks, might have trouble extending their gains in the face of expected corporate dollar demand for hedging purposes after April 1.
"Additional downside room for the U.S. dollar against the Asian currencies is limited, and the risk is towards a broad consolidation for the Asian currencies in Q2," said Thio Chin Loo, strategist at Banque Paribas in Singapore.
The Indonesian rupiah was slightly lower on dollar buying from Indonesians, including state banks, possibly to cover maturing forward contracts.
But its falls were countered by offshore buying as the market awaited the outcome of talks between Indonesia and the IMF.
Over the weekend Coordinating Minister fir Economy, Finance and Industry Ginandjar Kartasasmita said Indonesia was close to concluding talks on a package to resolve its financial crisis, but the issue of its $74 billion of private debt remained a sticking point.
Finance Minister Fuad Bawazier was more upbeat on Monday, saying there were positive signs the debt problem could be settled, but he did not provide any details.
Dealers in Singapore said the IMF package could be announced as early Wednesday of this week.
Elsewhere, the Thai baht shed some of its overnight gains but held up on foreign inflows for investment in short-term commercial paper.
Thailand's efforts at economic reform continued to win market approval and traders said the baht's rise in New York trade above the technical barrier of 38 to the dollar had put it on track for the 35 level.
Thai Deputy Finance Minister Pisit Lee-atham said the baht was now trading at an appropriate level after firming to 37.95 at one point on Monday against 38.40 on Friday.
But according to a Reuters poll, the baht is expected to weaken in the next three months as its recent surge is not matched by fundamentals.
The poll of 10 regional dealers and analysts produced an average forecast of 39.70 baht to the dollar in three months.
The Thai central bank is due to unveil tougher bank loan criteria and provisioning standards by Tuesday, in line with reforms tied to an IMF loan package.
The Philippine peso gained from dollar inflows to the stock market on the first trading day after the country's graduation from an IMF program, but traders said it was facing some resistance at the 37.00 level.
The Malaysian ringgit was confined to a narrow range as corporate dollar demand below the 3.55 level blocked its rise.
The Singapore dollar hovered around 1.5900 to the dollar after running up against apparent central bank intervention to curb its rise near 1.5850 late on Friday.
The South Korean won softened on dollar short-covering after Finance Minister Lee Kyu-sung said he believed the economy would contract by between 0.2 and 0.8 percent in 1998.