Asian currencies mostly down, economic concerns cited
Asian currencies mostly down, economic concerns cited
SINGAPORE (Dow Jones) : Asian currencies retreated Tuesday as investor concerns over weakening economic fundamentals in the region triggered a new round of dollar buying.
Efforts by Japan's Ministry of Finance to weaken the yen also helped provide a base for the dollar against Asian currencies.
However, analysts cautioned that the dollar remains vulnerable in the face of the deteriorating U.S. economy, and that the yen strength will persist as the repatriation of Japanese assets continues amid uncertainty over how the U.S. will respond to the Sept. 11 terrorist attacks in the U.S.
In trading Tuesday, the Singapore dollar fell to a near seven- week low against the U.S. currency.
"The resilience of the U.S. dollar in Asia amidst yen strength in starting to attract the attention of the market," DBS Bank said in a note to clients.
The acquisition of foreign companies by Singaporean firms, such as Singapore Telecommunications Ltd's takeover of Australia's Cable & Wireless Optus, has resulted in capital outflows that have put additional pressure on the Singapore dollar.
The U.S. dollar hit an intraday high of S$1.7730 in intraday trade Tuesday, its highest level since S$1.7791 on Aug. 9.
The U.S. dollar gave up some of its gains late in the session but still managed to end the Asian trading day at S$1.7696, up from S$1.7556 late Monday.
However, analysts at BNP Paribas and DBS Bank, say the longer- term trend for the U.S. dollar is lower.
Once military action starts in response to the terrorist attacks investors will be prepared to short the U.S. dollar, said Thio Chin Loo, regional currency strategist at BNP Paribas.
She said while the U.S. dollar may go higher in the near term, it could eventually retreat to S$1.7200 and possibly form a base around S$1.7000.
The Indonesian rupiah closed steady against the U.S. dollar in very dull trading Tuesday, though dealers warn the local unit will weaken if trouble erupts in this predominantly Muslim nation in the event of a U.S. attack on Afghanistan.
Radical Muslim groups in Indonesia have threatened to target U.S. interests here if Washington punishes Afghanistan's Taliban rulers for harboring Osama bin Laden, the main suspect behind the Sept. 11 terrorist attacks on the U.S.
The dollar closed at Rp 9,510 Tuesday, marginally above Monday's Rp 9,505.
For the moment, market participants will likely adopt a cautious stance and the dollar is expected to trade between Rp 9,485 and Rp 9,525 Wednesday.
The New Taiwan dollar closed slightly higher as U.S. dollar sales from exporters offset mild U.S. dollar demand from foreign institutional investors, dealers said.
The U.S. dollar closed at NT$34.574, up from NT$34.578 a day earlier.
The dollar closed at 1,308.7 won, up from Monday's close of 1,307.20 won.
Earlier in the day the dollar had fallen as low as 1,304.7 won as local stocks moved higher, boosting sentiment for the won.
Uncertainty regarding possibility of military action against suspected terrorists also weighed on the Philippine peso.
The dollar closed at 51.240 pesos on the Philippine Dealing System, up from 51.185 pesos Monday.
Traders said U.S. dollar recouped Monday's losses as banks bought back dollars that had been sold in the past few days.
Against the Thai baht the dollar traded at 44.455 bath late in Asia, up from 44.390 bath late Monday.