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.