Asian currencies mixed, rupiah slightly lower
Asian currencies mixed, rupiah slightly lower
SINGAPORE (Dow Jones): The Japanese yen's overnight gains buoyed several Asian currencies late Friday, although market participants were largely noncommittal amid anxieties over what moves monetary authorities in Thailand and Singapore would make, dealers said.
The Singapore dollar, the South Korean won and the New Taiwan dollar were stronger, while the Thai baht, the Indonesian rupiah and the Philippine peso were slightly weaker.
The Thai baht slipped as waning fears of rigid foreign exchange controls prompted short dollar covering, dealers said. Such fears had earlier been fueled by the central bank's more stringent disclosure requirements on foreign exchange trades for onshore banks.
The dollar was at 42.475 baht, up from 42.425 baht late Thursday.
Market participants were awaiting the outcome of the Thai central bank's meeting with commercial bank treasurers Friday. Bank of Thailand was to clarify its new disclosure requirements on foreign exchange transactions, effective March 1, at the meeting.
Most participants don't expect any surprises from the meeting as there is little need for tighter rules with the baht having recovered from its lows late last year. However, they aren't taking any chances and refrained from taking any new positions, dealers said.
The Indonesian rupiah closed a touch lower on Friday as investors bought the dollar in anticipation of the start of an offshore non-deliverable forward market next week.
The rupiah NDF market is an attempt by offshore banks to get around new Bank Indonesia rules which ban the transfer of rupiah offshore, and stop speculation against the local currency in the forward market.
A rupiah NDF market gets around the rules as it settles contracts only in dollars.
But it could still have an effect on the rupiah in the spot market, traders said. As players take out positions against the rupiah in the NDF, this will have a sentiment effect on the rupiah spot onshore. It could also lead to arbitraging between the different rates.
"If the NDF goes higher the spot, onshore will also go higher," a local trader said.
In anticipation that the NDF market will lead to a renewed fall in the rupiah - after a period of stability following the ban on offshore transfers - investors bought dollars in mild trade Friday.
The dollar ended Asian trading at Rp 9,610, higher than Rp 9,600 at Thursday's close. The U.S. unit is seen testing Rp 9,625 next week.
Investors want to use the NDF market to effectively short the rupiah amid concerns over political stability. President Abdurrahman Wahid's 15-month-old government is losing support in Parliament, which wants him to step down over two financial scandals.
DBS Bank said the general tone of the market is to buy dollars once it becomes clear that the new disclosure requirements for onshore parties on foreign exchange trades won't be a repeat of Indonesia's currency regulations.
Indonesia shocked market participants with regulations imposed about a month ago which effectively wiped out the offshore rupiah market.
At 0915 GMT, the Singapore dollar strengthened to S$1.7409 against its U.S. counterpart from S$1.7447 late Thursday, inspired by gains in the yen, dealers said.
Late in the day, the yen rallied on reported comments in a German newspaper from U.S. Treasury Secretary Paul O'Neill that the Bush administration won't pursue a strong dollar policy.
The dollar was quoted at Y114.80, down from Y115.47 late Thursday in New York. The dollar was at Y116.16 late Thursday in Tokyo.
Before the yen's sharp advance, participants were sitting tight ahead of the Monetary Authority of Singapore's policy statement Feb. 22.
Trading in the won and the New Taiwan dollar had come to a close when the yen spiked higher late in the day on O'Neill's reported remarks. Still, both currencies found reprieve from the yen's overnight gains, dealers said.
The dollar finished at 1,243.5 won, down from Thursday's close of 1,247 won.
Against the New Taiwan dollar, the U.S. currency closed at NT$32.299, lower than NT$32.344 Thursday.
On the Philippine Dealing System, the dollar closed at 47.550 pesos, up from 47.490 peso Thursday.