Asian currencies steady in thin trade
Asian currencies steady in thin trade
SINGAPORE (Dow Jones): Asian currencies were steady to
marginally firmer mid-afternoon Wednesday in subdued trading,
with most regional participants absent due to the Lunar New Year
celebrations, dealers said.
Financial markets in Singapore, Hong Kong, Taiwan and South
Korea were closed for the holidays.
The Indonesian rupiah closed lower Wednesday as local
companies bought dollars in very thin trade as many offshore
banks were closed for Lunar New Year holidays.
Although Indonesian banks traded as normal Wednesday, many
other regional centers were closed for the new year holidays,
reducing currency trading activity in the region.
The dollar closed at Rp 9,430, up from Rp 9,380 at Tuesday's
close.
Dollar demand came from local companies that need to fund
imports and pay back debt.
But fears that state banks would unload dollars to help the
rupiah helped keep a cap on gains in the U.S. unit, traders said.
Trade was also quiet as participants stayed out of the market
while they wait for the central bank to clarify new rules aimed
at stopping speculation in the rupiah.
Bank Indonesia last week banned lending of rupiah to non-
Indonesian residents to reduce the supply of the rupiah that can
be used for speculation offshore.
The market, however, remains confused over which transactions
are still allowed and which are forbidden.
Even after a lengthy discussion with Bank Indonesia last week,
foreign bankers are still unclear with the new regulations.
The Philippine peso strengthened amid easing political
anxieties as the new administration under President Gloria
Macapagal-Arroyo gets its house in order, and as corporate demand
for dollars waned.
The market was also heartened by Philippine Finance Secretary
Alberto Romulo's comments Wednesday that the government hopes to
eliminate the budget deficit in 2004, signaling its resolve to
address the country's fiscal problems. This year's budget deficit
was targeted at 121 billion pesos (US$2.5 billion) by the
previous administration.
"Comments like that show the government has the right
priorities," said Mansoor Mohi-uddin, regional currency
strategist at UBS Warburg.
On the Philippine Dealing system, the dollar was at 48.575 in
mid-afternoon trading, down from Tuesday's close of 49.200 pesos.
The Thai baht was marginally higher on hopes of greater
political stability after Thai election winner Thai Rak Thai
party reached a coalition deal with New Aspiration Party to
jointly form the next government, dealers said.
Thai Rak Thai leader Thaksin Shinawatra also said Wednesday he
would invite an unnamed third party to join the coalition.
"It's good that the new government is in place," UBS Warburg's
Mohi-uddin said, adding, however, that policy uncertainties
remained.
The dollar was at 42.97 baht, down slightly from 43.08 baht
late Tuesday.