Asian currencies mostly down; market dithers on MAS policy
Asian currencies mostly down; market dithers on MAS policy
SINGAPORE (Dow Jones): Renewed weakness in the Japanese yen
pressured most Asian currencies lower late Thursday, with the
Singapore dollar leading the descent as it spiraled to fresh 38-
month lows, cracking a key support level along the way, dealers
said.
Resisting the pressure from its regional peers, the Indonesian
rupiah was steady on dollar sales by local state banks and waning
corporate demand for the U.S. currency, dealers said.
The dollar ended Thursday at Rp 10,415, up from Rp 10,378 at
Wednesday's close.
Dealers said the dollar will likely hold above Rp 10,400 as
there is demand at this level. Resistance for the dollar/rupiah
is expected at Rp 10,500.
The chance of further political tensions - after President
Abdurrahman Wahid said Wednesday he would challenge Parliament's
decision to impeach him in court - remains high. Parliament wants
to remove Wahid after it censured him earlier this year in
connection with two financial scandals.
Concerns over delayed IMF loans continue even though an IMF
official said Thursday he was optimistic that the fund would send
a team to Jakarta next month to review a stalled lending program.
The market remains skeptical of a short-term fix.
The Singapore dollar extended its precipitous fall, sinking
below the psychologically important S$1.80 support level to the
U.S. currency, before rebounding on fears of intervention by the
monetary authority, dealers said.
The absence of an aggressive intervention by the MAS fueled
market speculation of a shift in the authority's policy stance
from a mildly tightening bias to neutral, market watchers said.
At 0850 GMT (3:50 a.m. EST), the U.S. dollar was at S$1.7992,
down from its intraday peak of S$1.8040, its highest level since
January 1998, when Singapore was mired in a regional financial
crisis.
Benign inflation and comments by Prime Minister Goh Chok Tong
that he expects Singapore's economy to expand 5 percent this year
- the lower end of the official 5 percent-7 percent growth
forecast - added to the pressure on the Singapore dollar, market
watchers said.
Singapore Telecommunication Ltd.'s takeover of Australia's
Cable & Wireless Optus is also "creating a negative sentiment
toward the currency," Redward said, but added that this wasn't
the key factor that's driving the Singapore dollar lower.
"It's the slowing economy and lower inflationary pressures
that's allowing the authority to let the trade-weighted currency
weaken somewhat," he said.
The yen's fall back to below Y123 against the dollar and
foreign equity fund outflows, stoked by Nasdaq's losses, dealt a
blow to the South Korean won and the New Taiwan dollar, dealers
said.
The dollar finished at 1,318.6 won, higher than Wednesday's
close of 1,304.5 won.
With the local central bank largely sidelined, the New Taiwan
dollar weakened to NT$32.757 against its U.S. counterpart, from
NT$32.669 Wednesday.
Local authorities in Thailand also appeared to be tolerating
the local currency's weakness.
Suggestions by senior Thai officials Thursday that the
government would tolerate the baht's current weakness, as
regional currencies slumped, provided market participants the
greenlight to push it lower.
The Thai currency was at 44.765 baht, lower than 44.400 baht
late Wednesday.
Feeling the heat from its regional peers, the Philippine
currency closed at 49.355 pesos, from 49.215 pesos Wednesday.