Asian currencies mixed but may weaken in the future
Asian currencies mixed but may weaken in the future
SINGAPORE (Dow Jones): Southeast Asian currencies are mixed to
mostly steady late Tuesday, reflecting some of the stability of
major currencies.
The Singapore dollar, Thai baht and Philippine peso are
slightly weaker against the U.S. dollar while the Indonesian
rupiah is stronger after all having traded with relatively low
volumes, said market players. But over the medium term, sentiment
for the region's currencies still remains weak, they said.
Reluctance to take fresh positions ahead of the long Chinese
Lunar New Year holidays next week also contributed to some of the
lethargy in the regional currencies, said market participants.
"Major currencies are directionless and so that might be
causing little interest. Overall, the road to recovery (for
southeast Asian countries) is still uncertain...so we can expect
southeast currencies to weaken in the medium term," said Chia
Woon Kien, regional economist at SE Banken Asia.
Market participants noted that in the absence of other major
factors, the continued downtrend in southeast Asian equities
markets could pressure currencies lower.
The Indonesian rupiah is bucking the trend, trading against
the dollar at Rp 8,750, up from Rp 8,875 late Monday.
The short-term trading range for the dollar against its
Indonesian counterpart is seen between Rp 8,500 to Rp 9,000,
market participants said.
Political developments aside, "easier monetary policy has
taken a back seat to currency stability in Indonesia," said an
economist at Standard Chartered Bank in Singapore.
"The International Monetary Fund had recognized that to help
Indonesia keep to its path of reforms, it would need to provide
official support between now and the June elections to keep the
rupiah from running away again," he said.
In the interim, state banks are expected to continue offering
dollars in the hope of preventing the dollar-rupiah from
penetrating the key 9,000 level," said the economist.
Against the Singapore dollar, the bias is still toward a rise
in the U.S. dollar, market sources said. They noted that as local
interbank rates remain low, the preference will be for higher-
yielding currencies.
At 09:00 GMT (4:00 a.m. EST), the dollar was at S$1.6930, up
from S$1.6890 late Monday.
Against the Thai baht, the dollar was traded at 37.0450 baht,
up from 36.945.
In the short term, market players said the dollar should hold
between 37 baht and 38 baht but head higher to 41 baht levels
after the Chinese New Year holidays.
Against the Philippine currency, the dollar averaged 39.46
pesos on the Philippine Dealing System, up from 38.928, Monday's
reference rate.
Market players said the dollar should remain well bid against
the peso in coming sessions.
Elsewhere in north Asia, most currencies like the Hong Kong
dollar and the South Korean won were mostly steady in range-bound
dealings, except for the New Taiwan dollar which ended lower on
the weaker yen.
The dollar was traded at 114.60 yen late Tuesday, up from
113.66 late Monday.
At the end of Taipei dealings, the U.S. dollar ended higher at
NT$32.288, up from NT$32.265 during the previous session.
Dealers said the Taiwan central bank sold US$150 million
Tuesday to keep the U.S. dollar from rising above NT$32.30.
The Hong Kong dollar was steady late Tuesday, but forward
foreign exchange premiums edged higher.
The U.S. dollar was quoted at HK$7.7490, unchanged from late
Monday.
Against the won, the dollar is slightly stronger, following a
session of range-bound trading. The dollar finished Tuesday at
1,175.9 won, up slightly from Monday's closing level at 1,175.5.