Asian currencies plunge as local firms rush to buy dollars
Asian currencies plunge as local firms rush to buy dollars
HONG KONG (Dow Jones): Most Asian currencies dropped steeply during local trading hours Monday as dollar-supportive intervention by the Bank of Japan triggered an end-of-the-month rush to acquire the U.S. currency.
The Indonesian rupiah and the Thai baht both finished Asian dealing down compared with levels seen Friday, as dollar-buying by local corporations in Bangkok and Jakarta dominated trade.
Dollar-buying also weighed on the Philippine peso, while the sharpness of the Singapore dollar's decline led dealers to believe that the Monetary Authority of Singapore was intervening against the local currency.
The South Korean won, however, held its own, strengthening against the U.S. dollar as the country's strong economic performance continued to attract heavy inflows of foreign investment funds into the Seoul stock market.
The New Taiwan dollar also edged higher.
The Bank of Japan's action Monday to support the dollar and arrest the yen's appreciation sparked an early round of dollar- buying against the Southeast Asian currencies.
Heavy bids were seen from customers in Bangkok and Jakarta as regional corporations hastened to acquire dollars lest the U.S. currency appreciate further before their debt service obligations fall due at the end of the month.
Fearing a liquidity crunch ahead of the New Year, customers also bought dollars to meet December's debt payments, exaggerating the decline in the regional currencies, traders said.
"Local corporations are buying in a last ditch attempt to get dollars before the month's end," said a dealer at one U.S. bank in Singapore. "And they are buying for December too. Demand is extra big this month."
Toward the end of Asian trading hours the dollar had been pushed higher to trade against the baht at 39.0350 baht, up steeply from 38.7650 baht late on Friday.
Against the rupiah the U.S. currency had risen to Rp 7,320, up from Rp 7,200 Friday as fears of trouble in the restive provinces of Aceh and Irian Jaya further fueled demand.
Against the Philippine peso, the dollar rose to close at 40.935 pesos, up from 40.835 pesos at the end of Friday's session, despite a rise in government debt yields at the weekly auction.
The weight of bids to buy the U.S, dollar against the Singapore dollar forced some market participants to conclude that the Monetary Authority of Singapore was covertly intervening in the market, acting through local and locally-active foreign banks to push the Singapore currency lower.
Dealers suggested that the MAS was keen to emphasize its grip on the local currency's exchange rate after it relaxed Friday a number of restrictions governing foreign banks' access to the fledgling Singapore dollar debt market.
Late in Asian trading Monday, the U.S. dollar was being quoted at S$1.6765, up from S$1.6710 Friday. So heavy was the buying Monday that one dealer at a Japanese bank in Singapore suggested the U.S. dollar was likely to be pushed to a six-week high above S$1.6800 in the near term.
The South Korean won strengthened as Korean asset markets continued to attract heavy fund inflows of around $50 million a day from foreign investors.
Won bulls were further encouraged by comments made over the weekend by the country's trade minister, Han Duck-soo, who said the won's strength hasn't damaged South Korean export competitiveness.
Some observers interpreted the remark as a sign that Seoul's hard line on won appreciation may be softening.
At Monday's close the dollar was quoted against the won at 1,159.00 won, down from Friday's close of 1,160.20 won.
The New Taiwan dollar also strengthened Monday in heavy trading. Intraday dealing saw the U.S. dollar sold as low as NT$31.693, its lowest level in two years, before it recovered slightly to end the session at NT$31.700, down a fraction from NT$31.724 Friday.