Asian currencies mostly up as U.S. rate fears subside
Asian currencies mostly up as U.S. rate fears subside
SINGAPORE (Dow Jones): Growing expectations that the U.S. Federal Reserve won't raise interest rates at the end of June and the rally in regional bourses bolstered most Asian currencies late Monday, dealers said.
The Indonesian rupiah continued to take centerstage, holding steady amid uncertainly over what measures the government will likely take to shore up the ailing currency, dealers said. Given the uncertainty, market participants are hesitant to establish long dollar positions, they added.
However, fears that Indonesia may impose capital controls, thereby banning or restricting offshore trading of the rupiah, have eased.
Indonesian President Abdurrahman Wahid said Monday he wasn't planning to impose capital controls. International Monetary Fund Managing Director Horst Koehler said Abdurrahman told him earlier in the day that imposing capital controls would be illogical and would, in fact, weaken the rupiah.
Indonesian Finance Minister Bambang Sudibyo reportedly said the government is considering implementing a mechanism to make exporters repatriate their foreign exchange earnings, "instead of parking them in Singapore."
In late trading, the dollar was quoted at Rp 8,445, barely changed from Rp 8,473 late Friday.
Strong demand from companies and banks in Jakarta around Rp 8,400-Rp 8,450 supported the dollar, dealers said. Profit-taking by banks in Singapore and local state-run banks, however, capped the dollar around IDR8,515, they added.
Simmonds at Salomon Smith Barney said he expects the dollar to resume its recent uptrend - which was derailed last week amid fears that Indonesia would impose capital controls - and hit Rp 9,000 over the next three months.
"We have enough in fundamentals to keep the currency on the back foot against the dollar," Simmonds said.
"Asian markets are joining in a bout of cautious euphoria," said David Simmonds, a currency strategist at Salomon Smith Barney.
Market participants unwound long dollar positions - which were built up in recent weeks - as fears of an aggressive rate tightening in the U.S. subsided.
Weaker-than-expected U.S. employment data for May unveiled Friday has added to growing evidence that the U.S. economy may be cooling, hence reducing the chances of another rate hike when the Fed's policy-setting arm next meets on June 27-28.
Elsewhere, the Philippine peso emerged unscathed from Sunday's bomb blast at Manila international airport, and rose on the strength of other regional currencies, dealers said.
The dollar closed at 42.320 pesos on the Philippine Dealing System, down from Friday's close at 42.465 pesos. The dollar averaged 42.421 pesos, down from Friday's average of 42.465 pesos.
Against the Singapore unit, the dollar sank below the S$1.7200 support to a one-month low of S$1.7195, down from S$1.7273 Friday.
The dollar could decline further to S$1.7150 "in one to two days' time" as market participants further unwind their long U.S. dollar positions, a dealer at a U.S. bank said.
The South Korean won ended Monday at its highest level against the U.S. dollar in nearly three weeks amid another surge in Seoul stock prices, which included strong net buying by foreign investors, traders said.
The dollar finished at 1,117.40 won, down from Friday's close at 1,125.20 won and its lowest close since May 17, when it ended at 1,115 won.
The New Taiwan dollar ended higher Monday on a strengthening yen and fresh inflows of foreign equity funds, dealers said.
The dollar closed at NT$30.792, compared with the previous close at NT$30.803.
Against the Thai currency, the dollar slipped to 38.835 baht from 39.045 baht late Friday.