Asian currencies recover from lows but still end weaker
Asian currencies recover from lows but still end weaker
HONG KONG (Dow Jones): After a shaky start to the session,
Asian currencies managed to recover slightly from new long-term
lows to finish local trading Wednesday only moderately lower
against the U.S. dollar.
The Indonesian rupiah actually ended the day a touch higher
against the U.S. currency, after earlier plunging to a new four-
and-a-half month low, as the dollar advanced to an intraday high
of Rp 8,250.
However, the initial rush to buy dollars was checked at that
level by sales of the U.S. currency executed by state-owned Bank
Mandiri.
Although the sums sold were not large, dealers immediately
concluded Bank Indonesia was behind the offers and backed off.
Their assumption was later lent weight when central bank
Deputy Governor Miranda Gultom admitted Bank Indonesia had sold
between $5 million and $10 million in the market Wednesday.
Fears of intervention also arrested the dollar's climb against
the Philippine peso.
"There is a lot of talk that the authorities were up there
selling dollars at the top of the market, so all across Asia
people are trimming back their long (dollar) positions against
the regional currencies," said a senior dealer at a major U.S.
bank in Singapore.
Despite traders' moves to scale back speculative long dollar
positions, regional currencies are unlikely to regain much of the
ground lost in recent days, said the U.S. bank dealer.
Investor confidence in Asia has been severely shaken over the
past week, he explained, and chances that foreign money managers
will rush back into the region in search of bargains are slim.
At the same time, a significant risk remains that the dollar
will resume its upward surge, despite the threat of central bank
intervention.
For the time being there is still a hard core of investors who
are sitting tight in Asia, but should the situation deteriorate
further, they too may begin to unwind their long positions in the
local currencies, warn analysts.
"The factors that triggered this move in the first place - the
negative international environment, the fear of U.S. interest
rate hikes, the tensions between China and Taiwan, and the
general lack of good news in the various markets around Asia - do
not look as if they are going to change any time soon. That
suggests that there is still upside potential for the dollar,"
said Andrew Fung, a treasury economist at Standard Chartered Bank
in Singapore.
Late Thursday, however, the U.S. dollar had eased from its
earlier high to settle at Rp 7,795, down from Rp 7,825 late in
Asia the day before.
Elsewhere in the region, the Philippine peso slipped to a new
six-month low after the central bank made what amounted to an
interest rate cut by stealth, despite the currency's recent
weakness.
The U.S. currency failed to extend its early rise however, as
talk the central bank had sold U.S. dollars to support the peso
swept the market.
By the close of local trading the U.S. dollar had softened to
39.225 pesos, down from its earlier high, but still above 39.150
pesos at the end of Wednesday's session.
Among other regional currencies, the Thai baht was pushed to a
new 10-month low in New York trading hours Wednesday, when the
dollar hit a high of 38.21 baht, according to brokers.
With the onshore market closed for a holiday Thursday,
offshore dealing was thin. Late in Asia, the U.S. dollar was at
38.02 baht, up from 37.94 baht the previous day.
Against the Singapore dollar, the U.S. currency rose to
S$1.6740, from S$1.6682 the day before.
In North Asia the Korean won slipped against the U.S. dollar
in response to investors' worries over progress toward
restructuring the Daewoo Group, and on growing fears that other
chaebol are also heading toward financial collapse.
At the local close, the U.S. dollar was quoted at 1,205.70
won, up from 1,201.80 won the previous day.
Against the New Taiwan dollar, the U.S. currency ended at
NT$32.131, up from NT$32.118 Wednesday as the central bank
continued actively to damp market volatility.