Asian currencies mixed late, market awaits fresh U.S. data
Asian currencies mixed late, market awaits fresh U.S. data
Dow Jones, Singapore
Asian currencies were mixed against the dollar in a lackluster trading session Friday.
The South Korean won, New Taiwan dollar and Philippine peso weakened, while the Singapore dollar, Thai baht and Indonesian rupiah strengthened.
Continuing uncertainty about what slower U.S. growth may mean for the global economy kept market players from pushing currencies strongly in either direction, analysts said.
A recent string of negative economic data out of the U.S., including weak gross domestic product figures for the second quarter and several reports showing soft manufacturing activity in July, added to concerns that the U.S. may experience a double dip recession.
Such a scenario, while unquestionably bad for the U.S., could also hurt Asian economies that rely to varying degrees on demand from the U.S. for their exports.
But there are other signs the U.S. economy remains healthy, including a greater-than-expected 10 percent increase in July auto sales to 18.1 million vehicles at a seasonally adjusted annual rate compared with a year earlier. This was the highest rate since a record of 21.3 million last October.
Players will be looking to the U.S. July employment report to be issued later Friday that could help establish a clearer direction for trading.
"While labor market data tend to be a lagging indicator, the current negative bias in U.S. financial markets will leave the dollar vulnerable to a weaker-than-expected report," BNP Paribas said in a research note.
The New Taiwan dollar weakened for the first time in four sessions after the central bank cut rates on short-term certificates of deposits it uses in open market operations.
A central bank official said the move didn't represent an easing of monetary policy, but rather was an effort to keep an appropriate slope to the yield curve for the CDs.
However, some analysts said the central bank was gearing up for a cut in the official discount rate aimed at slowing down the appreciation of the New Taiwan dollar.
The U.S. dollar closed at NT$33.723, up from NT$33.667 Thursday.
The won was pressured by U.S. dollar short covering and foreign selling of local stocks.
The dollar closed at 1,184.5 won, up from 1,182.8 won Thursday.
Foreign investors were net sellers of 207 billion won worth of shares Friday, continuing a recent trend. When those investors sell local stocks, they usually convert the won proceeds into dollars, thereby supporting the U.S. currency.
The dollar traded weaker in the morning, hitting a low of 1,175.7 won as exporters sold the U.S. currency and other players unwound long dollar positions. At that level, talk of possible central bank intervention to support the dollar began circulating, helping build a base for the U.S. currency's rebound in the afternoon session.
The peso was weighed down by corporate demand for dollars and a rumor - which was subsequently denied - that the country's finance secretary would resign.
The dollar closed at 51.30 pesos on the Philippine Dealing System, up from 51.15 pesos Thursday.
The dollar opened at 51.10 pesos, but rallied in the afternoon to a high of 51.32 pesos, after the rumor circulated that Finance Secretary Jose Isidro Camacho planned to resign.
Camacho immediately denied the rumor, helping to calm the market before trading closed.
"I have no reason to resign. It's not even within my consciousness," Camacho said.
The rupiah was supported by suspected intervention from the central bank.
The dollar ended at Rp 9,085, lower than Rp 9,140 at Thursday's close.
Dealers said the central bank sold about $20 million in the spot market to spur demand for the local currency. The central bank doesn't comment on specific actions in foreign exchange markets.
Deputy central bank Governor Miranda Gultom said Friday the bank expects interest rates to fall further this year due to benign inflation. He also said the bank expects the rupiah to strengthen toward the end of the year.
The Singapore dollar was buoyed by a stronger yen.
Late in Asia the U.S. dollar was quoted at S$1.7559, down from S$1.7575 late in Asia Thursday. It traded between S$1.7548 and S$1.7574.
The U.S. dollar traded as low as S$1.7515 in early trading. But buying from local banks later helped lift the U.S. unit off its early lows and back above S$1.7550.
The baht also benefited from yen strength. In addition, net foreign buying of Thai stocks a day earlier helped sentiment toward the local currency, dealers said.
Near the end of Asian trading the dollar was quoted at 42.105 baht, down from 42.140 baht late Thursday.