Asian currencies mixed late, MAS fears lift S'pore dollar
Asian currencies mixed late, MAS fears lift S'pore dollar
SINGAPORE (Dow Jones): Asian currencies were mixed late
Tuesday, with market players precariously holding on to their
heavy long-dollar positions, dealers said.
Except for the Philippine peso, which nudged new six-month
lows, Asian currencies consolidated within tight ranges as
participants were wary of raising the ire of the region's central
banks, dealers said.
The Indonesian currency was unchanged at Rp 11,340 to the
dollar, as participants refrained from taking any major positions
ahead of the planned impeachment of President Abdurrahman Wahid,
dealers said.
Easing anxieties over Argentina's debt problems have also
provided a palliative effect on Asian currencies, dealers said.
Meanwhile, the lack of any clear direction from the Japanese
yen provided little incentive for currencies to snap out of their
ranges. Although the yen was slightly weaker, it remained buoyed
around 125.50 yen to the dollar.
Markets are also on tenterhooks ahead of U.S. Federal Reserve
Board Chairman Alan Greenspan's semiannual congressional
testimony Wednesday, as they seek clues on the health of the U.S.
economy.
The Singapore dollar strengthened despite a sharper-than-
expected fall in the city-state's non-oil domestic exports in
June, as the monetary authority was suspected to have offered to
sell U.S. dollars to counter the pressure on the local currency,
dealers said.
"It's checking the market's enthusiasm to buy U.S. dollars,"
said a senior dealer at a European bank.
A local bank and a European bank - both of which were believed
to be acting on behalf of the Monetary Authority of Singapore -
were persistently offering to sell the U.S. currency around the
S$1.8360 to S$1.8375 levels, dealers said.
With the central bank stepping up its vigilance - some dealers
also believed it sold U.S. dollars around S$1.8380 to S$1.8389
overnight - the U.S. currency retreated to S$1.8341 at 0900 GMT
(4 p.m. Jakarta time) Tuesday. Late Monday, the U.S. dollar was
higher at around S$1.8388.
Singapore's non-oil domestic exports fell a nominal 16.9
percent to S$7.79 billion in June as the performance across all
sectors slumped, including key electronics exports, the Trade
Development Board said Tuesday. The decline in June was sharper
than the economists' consensus forecast for an 11.6 percent fall.
The government body expects trade performance in the third
quarter to be negative.
Despite Singapore's grim export outlook and the likelihood
that the recession-hit economy will continue to struggle this
quarter, the MAS will unlikely tolerate a sharp weakening of the
local dollar, unless the currencies of its major trading partners
and competitors fall much further, analysts said.
"Unless you see dollar/yen breaking the next resistance to
pave the way for 130 yen, I don't expect dollar-Sing to move
above S$1.84," said DBS Bank's market strategist, Philip Wee.
Weighed by domestic economic concerns and the tight supply of
dollars, 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, dealers said.
The thin trading volume of $49.5 million exaggerated the
peso's losses, while the central bank stayed on the sidelines
despite repeated jawboning by the authority, dealers said.
The central bank said it may sell the U.S. currency if dollar
liquidity is tight and if speculative pressure builds on the
peso.
The dollar ended at 53.950 pesos, eclipsing the previous six-
month closing high of 53.710 pesos Monday.
Weighed by the peso, the Thai currency was marginally weaker
at 45.755 baht per dollar, compared with 45.725 baht late Monday.