Asian currencies mixed; Argentine impact contained
Asian currencies mixed; Argentine impact contained
SINGAPORE (Dow Jones): Asian currencies were mixed in cautious
trading late Friday, as participants caught their breath
following the market's volatility over the past week, dealers
said.
As participants continued to fret over Argentina's possible
default on its roughly US$130 billion in government debt, market
watchers noted the impact on Asian foreign exchange markets have
been relatively contained, despite the onslaught on other
emerging market currencies.
Although Asian currencies are already vulnerable to recession
concerns in the region, market observers said the threat of a
financial contagion in emerging markets will unlikely resurrect
the 1997-98 financial crisis in Asia.
Standard Chartered Bank's treasury economist, Steve Brice,
attributed the currencies' ability to withstand the shock waves
from Argentina to "a lack of significant investment in the region
- particularly in Southeast Asia - and currency restrictions or
manipulation, rather than people feeling relatively more positive
about Asia's economic, political and economic outlook."
"Taiwan and the Philippines remain the major exceptions for
now, with Indonesia likely to follow suit once the euphoria
surrounding (President Abdurrahman Wahid's) impeachment
proceedings wanes," Brice said
As caution prevailed, participants were hesitant to take any
aggressive positions in the market, dealers said.
The Indonesian rupiah closed higher as dollar selling by state
banks pushed investors to quit their long-dollar positions,
traders said.
State banks sold into a thin market at the dollar's intraday
high of Rp 11,365. At this level, few local companies with
foreign debt or a need to import were willing to buy dollars,
they said.
The action pushed the dollar lower, sparking some stop-loss
selling from other banks which are generally long on dollars
given the country's unstable political situation.
The dollar moved to an intraday low of Rp 11,325 on the stop-
loss selling, rebounding a little to end the day at Rp 11,340,
still down from Rp 11,355 at Thursday's close in Asia.
The South Korean won continued to play catch up, after
recently outperforming many of its regional peers, dealers said.
The dollar finished at 1,308 won in heavy trading, higher than
Thursday's close of 1,300.7 won.
Market participants were wary of aggressively pushing down the
Philippine peso, the New Taiwan dollar and the Singapore dollar,
as the central banks appeared to step up their vigilance, dealers
said.
The New Taiwan dollar floundered past the NT$35 mark earlier
in the day as heightened anxieties over the slowing economy.
Exporter U.S. dollar sales and intervention by the central
bank pushed the U.S. currency back below the NT$35 mark, from its
intraday high of NT$35.05, dealers said.
The U.S. dollar closed at NT$34.975, little changed from
NT$34.976 Thursday.
On the Philippine Dealing System, the peso yielded slightly to
concerns over Argentina and corporate demand for dollars, dealers
said.
Speculation of intervention around 53.20 pesos - denied,
however, by the central bank - kept a rein on the peso's decline,
dealers said.
The dollar closed at 53.17 pesos, slightly higher from 53.08
pesos Thursday.
The Singapore dollar wallowed between S$1.8345 and S$1.8360 to
the U.S. currency all day, as participants were wary of provoking
the monetary authority again, following its aggressive defense of
the local dollar Thursday when it dived toward S$1.8400.
At 0920 GMT (4.20 p.m. Jakarta time), the U.S. dollar was at
S$1.8356, little changed from S$1.8353 late Thursday.
The Thai currency was marginally firmer at 45.610 baht per
dollar after barely moving all day, compared with 45.625 baht
late Thursday.