Asian currencies mostly up, U.S. dollar takes battering
Asian currencies mostly up, U.S. dollar takes battering
Nirmala Menon, Dow Jones
Most Asian currencies were higher Monday with several shooting to new multi-month highs Monday as confidence in the U.S. dollar was hammered by a new string of accounting revelations from U.S. companies, and after Japanese Finance Minister Masajuro Shiokawa's bearish remarks over the weekend.
Only the Indonesian rupiah weakened against the U.S. dollar as central bank purchases of the local currency couldn't offset corporate purchases of dollars to pay for imports. The Korean won and the Thai baht both ended at multi-month highs, while the Philippine peso, Singapore dollar and New Taiwan dollar closed higher against the U.S. unit.
"People pretty much jumped on the sell dollar bandwagon," said Thio Chin Loo, senior currency analyst at BNP Paribas in Singapore, adding that Shiokawa's remarks over the weekend "isn't good for the (dollar's) outlook."
At a weekend meeting of European and Asian finance chiefs in Copenhagen, Shiokawa said officials in various countries believed the dollar was in a downtrend, and could fall to its post-Sept. 11 low of 115.80 yen.
The greenback was dealt a further blow by more accounting- related controversies at big U.S. companies, analysts and traders said.
Drug giant Merck & Co. said it recorded $12.4 billion in revenue from its pharmacy benefits unit over the past three years that it never actually collected. However, Merck said its revenue-recognition policy conforms to generally accepted accounting principles and that it wouldn't affect its net income.
That news came soon after energy firms Reliant Resources and Reliant Energy late Friday announced they had amended their revenues downward by more than a combined $15 billion.
Analysts said the spate of accounting controversies has further overshadowed the dollar's already week outlook.
"A lot hinges on the headline news on these issues. For now, the risk is to the downside on the U.S. dollar," said Thio.
In Asian trading, the Singapore dollar rose in tandem with the yen, and ahead of the release of advance estimates of second- quarter gross domestic product data Wednesday.
Late Monday, the U.S. dollar was quoted at S$1.7625, from S$1.7721 late Friday.
Against the baht, the dollar crashed to a 22-month low and was quoted at 41.435 baht late Monday from 41.645 baht before.
A lack of corporate demand for dollars coupled with the greenback's general weakness helped boost the Philipine peso. The dollar ended at 50.470 pesos, from 50.595 pesos Friday.
Meanwhile, the Korean won rode on the yen's rise to a 19-month high against the dollar. The dollar ended at 1,191.4 won from 1,204.9 won Friday.
The won strengthened despite another government warning intended to dull the bullish won sentiment.
Against the New Taiwan dollar, the greenback closed at NT33.513, from NT33.580 Friday, even though the central bank reportedly intervened to buy U.S. dollars intermittently.
But the Indonesian rupiah bucked the regional trend and weakened, despite intervention by Bank Indonesia.
Traders said demand from importers surged, likely against any rising political uncertainty ahead of the annual session of the country's highest legislative body next month, and after weekend violence in troubled Aceh province.
State oil company Pertamina was suspected of buying U.S. dollars earlier in the day to finance the import of fuels.
Late Monday, the dollar was quoted at Rp 8,900, from Rp 8,850 late Friday.