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.