Asian currencies mixed late; Brazil deal helps sentiment
Asian currencies mixed late; Brazil deal helps sentiment
Alan Yonan Jr., Dow Jones, Singapore
Asian currencies were mixed Thursday as a late-session slump in the yen caused the New Taiwan dollar, South Korean won and Philippine peso to reverse course and close weaker.
But the Singapore dollar, Thai baht and Indonesian rupiah strengthened modestly.
Regional currencies were fairly well supported for most of the session as the approval of a US$30 billion rescue package for Brazil from the International Monetary Fund (IMF) boosted sentiment toward emerging markets worldwide, analysts said.
However, the U.S. dollar's steady climb against the yen to 120.80 yen from around 120 yen in the last few hours of Asian trading triggered some spillover U.S.-dollar buying against other regional currencies.
The new IMF funding comes on top of existing loans the fund has approved for Brazil in an effort to stabilize a deepening economic crisis in South America.
The unusually large loan is intended to forestall a possible default on Brazil's $264-billion public debt, and insulate the country's vulnerable finances from the uncertainty of an October presidential election.
"This is great news for emerging markets," said Claudio Piron, currency strategist at Standard Chartered Bank in Singapore.
"Whenever the IMF puts money on the table it helps support risk appetites globally," he added.
The Brazilian loan, negotiated by the IMF management and endorsed by the U.S. Treasury Department, is expected to be formally approved by the IMF board next month.
The South Korean won was pulled off morning highs as offshore investors bought U.S. dollars in line with the U.S. currency's afternoon rally against the yen.
The U.S. dollar finished at 1,206.8 won, above Wednesday's close at 1,203.2 won.
Selling of Korean shares by foreign investors also dented sentiment toward the won, traders said. Foreigners were net sellers of 76.8 won billion in shares, which is likely to boost U.S.-dollar demand in coming sessions.
The New Taiwan dollar reversed early gains against its U.S. counterpart as it followed the yen lower. The U.S. dollar closed at NT$33.998, up from NT$33.895 Wednesday.
"The Taiwan dollar followed the yen today," said a dealer at a foreign bank in Taipei. The local unit was slightly stronger for most of the day as the yen gained ground against the U.S. currency, but when the yen softened late in the day the New Taiwan dollar followed suit.
The Singapore dollar strengthened slightly in thin trade, but was pulled off its highs by the yen's decline.
The U.S. dollar was quoted at S$1.7690 late in Asia, down from S$1.7707 late Wednesday.
Trading was confined to a tight range in thin pre-holiday trade. Financial markets in Singapore will be closed Friday for National Day.
The U.S. dollar opened around S$1.7620 and traded in a S$1.7670-S$1.7680 range for much of the afternoon before strengthening late in the session in tandem with its gains against the yen.
Against the peso, the U.S. dollar closed at 51.770 pesos in thin trading. Volume fell to $65.5 million from $214.3 million Wednesday.
The U.S. dollar's performance against the peso mirrored its moves against many other regional currencies, trading weaker in the morning session, then stronger in the afternoon.
Corporate U.S.-dollar demand was thin as companies remained mostly sidelined ahead of the public holiday in Singapore, a regional foreign exchange trading center.
The U.S. dollar closed below Rp 9,000 for the first time in nearly three weeks following foreign exchange market intervention by the central bank.
Near the end of Asian trading the U.S. dollar was quoted at Rp 8,985, down from Rp 9,080 late Wednesday.
Dealers said Bank Indonesia found little resistance to drive the U.S. dollar lower, with many market participants still keen to hold on to the rupiah given the sizable interest-rate differential between the two currencies.
The one-month rupiah deposit rate is currently around 14 percent, whereas the U.S. dollar deposit rate is less than 2 percent.
The Thai baht was slightly stronger in lackluster trade. Late in Asia the U.S. dollar was quoted at 42.475 bath, down from 42.535 bath late Wednesday.