Asian currencies mixed late, new capital rules hit baht
Asian currencies mixed late, new capital rules hit baht
Dow Jones Singapore
The baht weakened Friday on the Thai central bank's move to crackdown on speculative trading, while other regional currencies closed the Asian session mixed.
Effective Friday, the Thai central bank capped at 50 million baht the amount nonresidents can deposit with domestic banks in the short-term that isn't trade or investment related.
The central bank, concerned about the baht's strength, has been intervening in foreign exchange markets in recent months to slow the currency's rise. The baht has gained nearly 6 percent against the dollar so far this year.
"This measure was aimed purely at limiting the amount of ways foreign speculators can position for future baht strength," Standard Chartered Bank said in a research note.
The dollar rose to a one-week high of 41.080 baht in early trading, before backtracking later in the session. Late in Asia, the dollar was quoted at 40.810 baht, up from 40.470 baht late Thursday.
The Bank of Thailand acknowledged that the baht's retreat Friday was clearly the result of the new rule's on capital inflows.
Nonetheless, most analysts said the strengthening Thai economy and red-hot stock market will cause the baht to continue strengthening.
Standard Chartered forecast the dollar to fall to 39.50 baht by year-end, while JP Morgan was looking for a decline to 40 baht over the same period.
The Singapore dollar weakened in thin trade, tracking the baht's decline to some extent.
Near the end of Asian trading the U.S. dollar was quoted at S$1.7512, up from S$1.7481 late Thursday in Asia.
The U.S. dollar fell to its session low of S$1.7490 midday before staging a comeback in the afternoon as players covered short positions in the U.S. currency.
The U.S. dollar's stable performance against the yen also aided its rise in Singapore, especially amid suspicions the Japanese authorities may have been selling the yen to support the U.S. currency, dealers said.
The New Taiwan dollar weakened slightly against the U.S. dollar in thin trading after the central bank intervened on behalf of the U.S. currency.
The U.S. dollar closed at NT$34.10, up from NT$34.09 Wednesday.
Taiwan's financial markets were closed Thursday for the Mid- Autumn Festival, and many traders also took Friday off to enjoy a four-day break, traders said.
The central bank, which regularly buys U.S. dollars to control the strength of the local currency, accounted for as much as US$200 million of the day's total $415 million trading volume, dealers estimated.
In Manila, the central bank was suspected of intervening to support the flagging peso, which remains on shaky ground after slumping to a record low close two weeks ago.
The dollar ended at 54.990 pesos, above its intraday low of 54.910 pesos, but below its closing level Thursday of 55.030 pesos.
A trader with a local bank said it appeared the central bank was selling dollars to push the U.S. currency below the psychologically important 55.000 peso level.
Central bank officials couldn't be immediately reached to comment on intervention speculation.
Traders said the peso remains vulnerable over the near term due to political and security risks ahead of the May 2004 general elections.
The Indonesian rupiah benefited from a rally in the local stock market and expectations of foreign capital inflows associated with upcoming initial public offerings of state-owned companies.
Late in Asia the dollar was quoted at Rp 8,450, down from Rp 8,465 late Thursday.
The main index of the Jakarta Stock Exchange rose 2.25 percent to 578.375 points Friday, helped by purchases by foreign investors.
Also, the planned 30 percent stake initial public offerings of Bank Rakyat Indonesia and the gas distribution monopoly Perusahaan Gas Negara later this year, which are expected to attract foreign interest, sparked speculative rupiah buying, dealers said.
The South Korean won wasn't traded because financial markets in Seoul were closed for a public holiday.