Asian currencies mixed late; baht's stability may not last
Asian currencies mixed late; baht's stability may not last
SINGAPORE (Dow Jones): Asian currencies were mixed late Friday
in dull trade, finding little direction from the Japanese yen's
rangebound movements, dealers said.
The Indonesian currency was slightly weaker around Rp 11,200
against the dollar, compared with Rp 11,180 late Thursday on
corporate demand for the U.S. currency, dealers said.
Doubts continue about the Thai central bank's monetary policy
management, following the sacking of former central bank Governor
Chatu Mongol Sonakul last week, dealers said.
Market participants were wary of testing the central bank's
resolve, especially after Wednesday's intervention. The central
bank, under the new Governor Pridiyathorn Devakula, has
underscored its preference for a stable baht and a tighter
monetary policy stance.
Concerns over the Thai central bank's foreign exchange
disclosure requirements for nonresident transactions - which are
now under review - and fears of stricter trading restrictions in
the baht also damped offshore interest, dealers said.
"There's no incentive to trade," said a dealer at an Asian
bank. "The market's a little bit confused and nervous because the
central bank seems a little bit fickle at this moment."
At 0845 GMT (3:45 p.m. Jakarta time), the dollar was quoted at
45.135 baht, marginally higher from 45.090 baht late Thursday.
The dollar barely reacted to an increase in the central bank's
benchmark 14-day repurchase rate, as the move was has already
priced in the currency, dealers said.
The baht had strengthened briefly to less than 45 baht to the
dollar before the central bank's announcement in early trading as
participants braced for the imminent move.
But fears of intervention - the central bank had bought
dollars Wednesday when the U.S. currency sank below 45 baht -
pushed the dollar back above that level.
Foreign equity fund inflows, inspired by Wall Street's
overnight gains, helped lift the South Korean won, the New Taiwan
dollar and the Singapore dollar Friday, dealers said.
The dollar finished at 1,284.7 won, down from Thursday's close
of 1,286.1 won.
Against the New Taiwan dollar, the U.S. currency closed at
NT$34.053, a touch lower than Thursday's close of NT$34.065, in
dealings valued at US$343.5 million.
Taiwan's central bank - which regularly intervenes to smooth
out any volatility in the local currency - bought and sold an
estimated US$100 million throughout the session, dealers said.
The Singapore dollar was stronger at S$1.8084 against its U.S.
counterpart, compared with S$1.8097 late Thursday.
On the Philippine Dealing System, the peso fell on concerns
the ongoing hostage crisis in the south would be prolonged and
also on offshore dollar demand, dealers said.
The dollar closed at 50.910 pesos, higher than 50.710 pesos
Thursday.
Though market speculation that the central bank had bought
dollars in the market Friday wasn't confirmed, Simmonds at
Salomon Smith Barney/Citibank said the central bank will likely
pick up the U.S. currency when it is stable or weak to build its
foreign exchange reserves and service debt repayments over the
next few months.
"The nominal level of reserves is not that high" given the
lack of foreign direct capital or portfolio inflows into the
Philippines, he said, adding that the dollar will likely rise to
51.50 pesos "in the next month or so".
"There'll be more willingness to buy dollars to bolster
reserves rather than see any sustained strength in the peso,"
said Simmonds.