Asian currencies mixed, rupiah down on profit taking
Asian currencies mixed, rupiah down on profit taking
Dow Jones, Singapore
Asian currencies were a mixed bag late on Thursday, caught
between strong stock market performance and concern that central
banks might intervene to curb local currency strength.
The Philippine peso ended lower after the central bank
effectively eased monetary policy in a move that was widely
expected.
Indonesia's central bank also cut its overnight money market
intervention rate on Thursday, its sixth such reduction so far
this year. The Indonesian rupiah closed lower after a choppy
session.
The South Korean won was little changed. The Singapore dollar,
Thai baht and New Taiwan dollar were firmer.
The tone of the broad market during the day was biased toward
a softer U.S. currency due to the flow of foreign funds into
regional equity markets, said a trader at a U.S. bank.
"Dollar/Asians are on a soft-ish bias. Basically, (Asian
currencies) are trading on a strong stock market performance as
capital flows come into the region," he said.
There was also a lot of play on euro crosses as market players
sold the common currency ahead of a widely anticipated rate cut
by the European Central Bank later on Thursday, he added.
Bank of America, in a research note, said a combination of
currency appreciation and easing bias in interest rate policy
globally is allowing Asian central banks room to maneuver
monetary policy to stimulate domestic demand.
"Low interest rates and abundant liquidity is giving support
to regional stock markets - in turn aiding further currency
appreciation. Regional central banks tread the fine line of
allowing appreciation as a result of greater foreign capital
inflows, and resisting any damage to their export
competitiveness," Bank of America said.
The dollar ended at 53.330 peso on the Philippine Dealing
System, up from 53.270 peso on Wednesday.
Meantime, a combination of profit taking and dollar demand
from local importers pulled the rupiah lower after a volatile
session, traders said.
The dollar closed local trading at Rp 8,225, up from Rp 8,165
on Wednesday. Dealers said market players took profit on the
rupiah after it earlier rose to a 34-month intraday high of Rp
8,140 to the dollar.
Earlier on Thursday, Bank Indonesia cut its overnight money
market intervention rate to 10.25 percent from 10.50 percent.
Governor Burhanuddin Abdullah told Parliament that domestic
interest rates will fall further amid a benign inflation outlook.
The South Korean won finished almost unchanged in quiet pre-
holiday trade. Local financial markets will be shut on Friday for
a public holiday. The dollar closed at 1,200.3 won, from 1,200.6
won on Wednesday.
The New Taiwan dollar also finished higher on the back of a
strong stock market, as well as on the yen's gains versus the
U.S. unit, traders said. The U.S. dollar ended at NT$34.665, down
from NT$34.687 on Tuesday.
The Singapore dollar was modestly stronger late in Asia,
although it came off highs as the yen retreated slightly against
the U.S. dollar, dealers said. Late in the local session, the
U.S. dollar was quoted at S$1.7233, compared with S$1.7248 late
on Wednesday.
Aside from brief spurts of activity, trade in the local
currency market remained quiet.
"Everyone's lost interest to trade. It's been very quiet for
the past two days, aside from some cross-related trade," a
foreign bank dealer said.
"Everybody's watching the ECB (European Central Bank) today
for direction," he added.
As against the Thai baht, the dollar was quoted around 41.60
bath late in Asia, down from 41.68 bath on Wednesday.