Asian currencies mostly down as Japanese yen loses ground
Asian currencies mostly down as Japanese yen loses ground
SINGAPORE (Dow Jones): Most Asian currencies stumbled mid- afternoon Tuesday as the Japanese yen lost ground, and as investors turned their attention to the challenges facing the new Philippine government, dealers said.
Trading across the region was subdued, confined largely to position squaring ahead of the Lunar New Year celebrations, with Taiwan and South Korean financial markets closed for the holiday.
Several markets Tuesday closed early due to the holiday.
The Indonesian rupiah closed unchanged Tuesday in light trading ahead of the Chinese New Year holiday, celebrated in most Asian countries.
Although Indonesian banks will trade as normal Wednesday, many other regional centers will close for the holiday, reducing currency trading activity in the region.
The dollar closed at Rp 9,380, unchanged from Monday. The pair moved in a tight Rp 9,360 to Rp 9,385 range during the day.
Dollar demand came from local companies that need to fund imports and pay back debt, while the Indonesian Bank Restructuring Agency was possibly selling dollars, a local dealer said.
IBRA, which is charged with selling assets taken over from the banking sector, has said it will exchange $500 million of its profits into rupiah in the next month to help the local currency.
Most offshore traders stayed out of the market while they wait for the central bank to clarify new rules aimed at stopping speculation in the rupiah.
The Philippine currency floundered - slipping past the 50 peso support level against the dollar at one point - as concerns that former President Joseph Estrada may challenge his ouster smothered the market's jubilation over the smooth transition of power by Gloria Macapagal Arroyo, dealers said.
Strong corporate demand for dollars and concerns over whether the new government could rein in the government's budget deficit, and whether the May congressional elections would delay much- needed reforms also weighed on the peso, dealers said.
"It's still a very uncertain environment," said Steve Brice, treasury economist at Standard Chartered Bank, adding that the dollar will likely fluctuate between 48 pesos and 52 pesos in the short-term.
At the midday break, the dollar was 49.950 pesos, up from Monday's close of 49.300 pesos, but down from Tuesday's intraday high of 50.100 pesos.
The Singapore dollar was hit by a double whammy when the Japanese yen succumbed to renewed selling pressure and the Monetary Authority of Singapore suggested that its bias for a tightening monetary policy may be under review, with the U.S. economic slowdown, dealers said.
The yen fell after former top Japanese financial diplomat Eisuke Sakakibara said Group of Seven monetary authorities aren't likely to resist a weaker yen when they gather next month in Palermo.
At 0615 GMT, the dollar was quoted at Y117.13, above Y116.25 late Monday in New York. The dollar was at Y116.70 late Monday in Tokyo.
Against the Singapore dollar, the U.S. currency climbed to S$1.7386 amid thin trading, from S$1.7348 late Monday.
The Monetary Authority of Singapore told Dow Jones Newswires on Tuesday it's reviewing the island-state's economic growth and inflation outlook in light of the "uncertain external environment."
Singapore's de facto central bank will also issue a monetary policy statement late February, when it unveils its annual economic report.
"This suggests the possibility of the MAS shifting to a neutral exchange rate stance, from the current policy of gradually appreciating the Singapore dollar on trade-weighted basis," DBS Bank said. "It looks like the policy shift may occur sooner than what we had originally expected, that is, in the first half of 2001 rather than in the second half."
The Singapore dollar was trading at the strong end of its trade-weighted band, and a shift in the policy would push the currency toward the weak end. DBS Bank said a shift to a neutral policy would mean that the U.S. dollar should trade above S$1.7500.
In the Thai currency market, the dollar was at 43.140 baht, marginally higher than 43.090 baht late Monday.