Asian currencies mixed, rupiah climbs to six-month high
Asian currencies mixed, rupiah climbs to six-month high
Netty Ismail, Dow Jones, Singapore
Asian currencies were mixed late Tuesday, mostly off their intraday lows, as the yen reclaimed some ground.
The Singapore dollar, South Korean won and New Taiwan dollar had succumbed to the yen's slide toward 133.50 yen to the U.S. currency in early trading.
While the won and New Taiwan dollar later regained their footing to close stronger - along with the yen's bounce - the Singapore dollar continued to fall by the wayside as U.S. banks seemed to be caught short in the U.S. currency, dealers said.
Ironically, the currencies of South Korea and Singapore - which are expected to lead the rebound among the region's currencies in the second half of this year - have been feeling the brunt of the yen's recent weakness, noted David Simmonds, a regional currency strategist at Salomon Smith Barney/Citibank.
The Singapore dollar, the won, and to a lesser extent, the New Taiwan dollar, will continue to slump against the dollar in the second quarter, with the yen expected to flounder toward 137 yen -138 yen against the U.S. currency, Simmonds added.
But hopes of an economic rebound in the second half of the year will somewhat mitigate the onslaught from the yen on these currencies, he added.
As a result, the Asian currencies will continue to outperform the yen, even as they depreciate against the U.S. dollar, he said.
"I like Asian currencies, and would like to be positioning for some strength, but you ain't going to make much money against the dollar as the yen move against the dollar takes shape," said Simmonds.
The speed of the Singapore dollar's slide to two-month lows caught several participants off guard, as they had been betting for a near-term rebound in the Singapore currency, observers said.
But the U.S. dollar continued it ascent, "obliging stale (U.S. dollar) shorts to be squaring out at this stage," said Simmonds.
Still, "I don't think it's a particularly big move for dollar/Sing," said Simmonds. "It's a correction within what's still a recognizable range, catching people short in U.S. dollars."
Dealers said U.S. banks led the buying spree in U.S. dollars, even as the yen regained its footing.
The U.S. dollar was quoted at S$1.8438 at 0930 GMT (4.30 p.m. Jakarta time), higher than S$1.8367 late Monday. The U.S. dollar hit an intraday high of S$1.8445 earlier Tuesday.
After peaking at 133.47 yen in early trading, the dollar was quoted at 132.86 yen late Tuesday, below 133.37 yen late Monday in New York. The dollar was at 132.79 yen late Monday in Tokyo.
The South Korean won found additional respite from dollar sales by exporters, after the U.S. currency hit an intraday high of 1,333.5 won, dealers said.
"We think dollar/won is a sell on rally," said the head of Asian currency trading at a European bank in Singapore.
The U.S. currency closed at 1,329.3 won lower than 1,331.5 won Monday.
The New Taiwan dollar finished at NT35.037 against its U.S. counterpart, slightly stronger than NT$35.046 Monday.
The Indonesian currency continued to power ahead, hitting a six-month high of Rp 9,590 to the dollar, on expectations of capital flows from the sale of Bank Central Asia, dealers said.
Late in the day, the dollar was quoted around Rp 9,620, weaker than Rp 9,720 late Monday.
Dealers in Jakarta believe U.S. investment fund Farallon Capital had sold dollars to pay for its acquisition of the Indonesian government's 51 percent stake in BCA - the country's largest retail bank, dealers said. The first payment is due Thursday.
Even though the rupiah is now back on foreign investors' radar screens, doubts about the currency's ability to sustain its recent rally have started to creep in. Whether the rupiah's gains will continue in part depends on the government's commitment to economic reforms and its asset sales, analysts said.
The Thai currency was stronger at 43.360 baht to the dollar, compared with 43.405 baht late Monday.
On the Philippine Dealing System, the dollar closed at 51.145 pesos, up from 51.120 pesos Monday.