Asian currencies shed gains as baht wilts
Asian currencies shed gains as baht wilts
SINGAPORE (Reuters): Asian currencies surrendered some of
their gains to demand for cheap dollars late yesterday as the
Thai baht -- a star performer in recent sessions -- fell back
through a key support.
Declines in regional stock markets also depressed Asian
currencies, along with the U.S. dollar's late spike up after
Russian President Boris Yeltsin said U.S. President Bill
Clinton's moves on Iraq could lead to world war.
But dealers did not expect regional currencies to crash to new
lows in the near future.
"I think we're entering into a phase of consolidation from
here," a U.S. bank dealer in Singapore said.
He said recent sharp gains in the baht, Malaysian ringgit,
Singapore dollar and Indonesian rupiah had been driven by
aggressive dollar sales by a U.S. investment house in Hong Kong.
"Part of the reason seemed to be that they had a lot of funds
going into these stock markets," he said.
The baht slid back through the 50.00 per dollar level after
earlier climbing towards 46.00 as exporters unloaded dollars in
the face of the baht's sustained rebound after Bangkok scrapped a
two-tier currency trading system last week.
"There are all sorts of rumors from the King being ill to talk
that the Bank of Thailand is buying dollars. But I don't think
they should come into the open market," said one dealer.
Dealers said the baht reversed course as Thai companies sought
dollars for loan payments, investors booked profits and some
players started re-establishing long dollar positions.
"For me it should never have been 46 and even at 48 it was
overdone," said one foreign bank dealer in Bangkok.
The baht's drop triggered falls in other Southeast Asian
currencies, pushing the Malaysian ringgit back below the 4.00 per
dollar level in thin late trade.
The Singapore dollar was also down but managed to hold above
the 1.70 level against the U.S. dollar.
The Indonesian rupiah fell off its highs of 8,700 to the
dollar, shedding strength drawn earlier from dollar sales by the
central bank and U.S. funds.
The Philippine peso managed to close higher after trading a
range as corporate dollar demand was balanced by foreign fund
flows to the stock market.
In north Asia, the Taiwan dollar finished above the T$33 level
to the U.S. dollars, thanks to the yen's rise and expected
foreign fund inflows to the recently bullish stock market.
Foreign funds showed huge net buying of T$5.6 billion on
Tuesday and T$5 billion on Monday in the stock market.
The South Korean won ended slightly easier after hovering
between dollar demand from importers and dollar sales by
portfolio funds for stock market investments.