Asian currencies range-bound, won inches up on yen rise
Asian currencies range-bound, won inches up on yen rise
HONG KONG (Dow Jones): Most Asian currencies remained tightly range-bound in thin trading conditions through local hours Tuesday.
Only the South Korean won moved appreciably, strengthening against the dollar, despite a drop in the Seoul stock market as a rise in the Japanese yen spurred market players to cover short positions in the South Korean currency.
But the won's run-up proved limited, as the state-run Korea Development Bank stepped into the market to support the dollar above 1,118 won on behalf of a government anxious to suppress exchange rate volatility.
At the close of local trading in Seoul, the U.S. currency was quoted against the won at 1,118.50 won, down from 1,120.40 won the previous day.
The Indonesian rupiah lost ground, largely in response to commercial selling.
According to the head of trading at one bank in Jakarta, local units of Japanese corporations have demand to buy around $150 million against the rupiah over the next couple of weeks, as they repatriate funds ahead of the end of Japan's fiscal year March 31.
Because of the rupiah's illiquidity, their demand is having a significant impact on the spot exchange rate.
Over recent weeks, interest in the market has dwindled to such an extent that rupiah interest rates implied by currency swap rates have been able to fall to a discount to dollar rates without triggering a large scale speculative sell-off in the Indonesian currency.
Late Tuesday the dollar was at Rp 7,445, up from Rp 7,405 the previous day. Dealers expect resistance at Rp 7,500 to hold firm in the near term.
Intervention by the Taiwan authorities ensured the New Taiwan dollar remained stable despite lingering nervousness ahead of Saturday's presidential election.
Downward pressure on the currency eased compared with Monday, after Taiwan's government directed state-run investment funds to support the Taipei stock market, which suffered a 6.6 percent sell-off Monday in response to pre-election jitters.
Rates on short-term U.S. dollar/New Taiwan dollar non- deliverable forwards remained at a discount in the offshore market, indicating the market anticipates little chance of a sell-off in the Taiwan currency either ahead of or immediately following the weekend's elections.
At the close of domestic trading, the U.S. dollar was quoted against the New Taiwan dollar at NT$30.738, little changed from NT$30.741 at the end of Monday's session.
The baht barely stirred as the majority of market players remained on the sidelines in advance of a benchmark court ruling expected Wednesday in the Thai Petrochemical Industry case.
TPI's creditors, who are owed $3.5 billion, are seeking to have the company declared insolvent in an attempt to recover their loans. The company's management has opposed the move.
With the majority of market participants now anticipating TPI will be declared insolvent, a decision in favor of the creditors could have little significant positive impact on the baht in the short term, said a senior trader at a Thai bank.
But if the court rules against the creditor banks, the negative effect on investor sentiment could spark a baht sell- off, which could drive the dollar as high as 38.500 baht, he warned.
Late in Asia the dollar was quoted at 37.875 baht compared with 37.825 baht the day before.
The Singapore dollar ended local trading a touch weaker, as the market continued to talk of heavy outflows related to foreign investment by Singapore corporations.
Late in Asia, the U.S. dollar was at S$1.7071, up from S$1.7046 the day before.
On the Philippine Dealing System, the peso closed lower, with the dollar ending at Rp 40.935, up from Rp 40.865 at Monday's close.