Asian currencies mixed; central banks may have intervened

Asian currencies mixed; central banks may have intervened

SINGAPORE (Dow Jones): Asian currencies were mixed late Thursday as gains on most of the regional bourses and the stable yen mitigated jitters over Argentina's worsening crisis, dealers said.

Suspected central bank interventions in the foreign exchange markets of Singapore, Taiwan and the Philippines also helped the currencies regain their footing, dealers said.

As such, the growing nervousness in emerging markets everywhere over Argentina's possible failure to service its US$130 billion in debt, necessitating a possible restructuring, had a limited impact on Asian currencies, market watchers said.

The Indonesian rupiah closed almost flat against the U.S. dollar as investors wait to see the outcome of President Abdurrahman Wahid's impeachment in August.

The dollar closed at Rp 11,355, almost unchanged from Rp 11,350 Wednesday.

The Singapore dollar returned to the center stage after the monetary authority caught the market off-guard with its announcement that it has since July 1 shifted its policy bias to neutral, from a moderately tightening stance.

"Against the backdrop of a weaker external economic environment and a more protracted global electronics downturn, near-term growth prospects for the Singapore economy have turned significantly weaker while inflationary pressures are subsiding," said Tharman Shanmugaratnam, managing director of the Monetary Authority of Singapore.

"MAS has therefore shifted to a neutral exchange rate policy stance, with a policy band centered on a zero percent appreciation" of the trade-weighted Singapore dollar, he added.

In a knee-jerk reaction, the Singapore dollar plummeted to yet another 11-year low of S$1.8398 against the U.S. currency, as most participants had expected the central bank to reaffirm its moderately tightening policy stance, dealers said.

In explaining the Singapore dollar's swift rebound to S$1.8340, dealers said the MAS sold the U.S. currency aggressively to defend the local dollar.

At 0905 GMT (4.05 p.m. Jakarta time), the U.S. dollar was quoted at S$1.8353, higher than S$1.8345 late Wednesday.

The Philippine peso closed at its weakest level since President Gloria Macapagal Arroyo took over the helm of the country's leadership in late January, although suspected central bank intervention had narrowed its losses, dealers said.

The dollar had risen to as high as 53.400 pesos earlier in the day, but subsequently retreated to close at 53.080 pesos, marginally higher than 53.065 pesos Wednesday.

Some traders believed the central bank sold around $50 million when the dollar traded between 53.25 pesos and 53.35 pesos. The central bank declined to comment on the suspected intervention. Volume surged to $119 million from $76.7 million Wednesday.

A 1.9 percent jump on the Taipei bourse and U.S. dollar sales by the central bank helped the New Taiwan dollar recover from its weakest close Wednesday in almost 15 years, dealers said.

The U.S. dollar closed at NT$34.976, down from Wednesday's close of NT$35.050. Dealings were valued at US$525 million.

The central bank sold an estimated $300 million in the foreign exchange market Thursday to smooth the local dollar's volatility, dealers said.

In Korea, the dollar finished at 1,300.7 won, down from Wednesday's close of 1,308.8 won, as the benchmark stock index rose 1.1 percent.

The Thai currency extended its recent gradual descent to 45.625 baht per dollar, from 45.545 baht late Wednesday, dragged by the Singapore dollar's earlier fall, dealers said.