Asian currencies stronger as won hits post-crisis high
Asian currencies stronger as won hits post-crisis high
HONG KONG (Dow Jones): Sustained foreign investor interest in South Korean assets coupled with inward trade flows Wednesday to drive the won to its highest level since November 1997.
Most other Asian currencies also gained. Only the Thai baht slipped as traders unwound long positions established over the last week in anticipation of heavy foreign direct investment flows into Thailand.
The Indonesian rupiah ended higher against the dollar in thin trading Wednesday due to dollar offers from offshore banks in the late afternoon.
The dollar closed Wednesday at Rp 7,435 in Asia, down from Rp 7,470 the previous session.
Dealers said the rupiah rise may have been spurred by the sharp increase of the South Korean won, which hit a post-crisis high Wednesday.
They also suspected the Indonesian Bank Restructuring Agency to have pushed the rupiah up.
"One offshore bank unloading the dollar was the one usually asked by IBRA," to act on its behalf, said a dealer with an European bank in Jakarta.
The continued run-up in the won prompted repeated verbal interventions from Korean finance officials, anxious that the currency's rapid appreciation will dent the country's export sector.
Threats of intervention did little to damp the enthusiasm of won bulls, who noted comments from Finance Minister Lee Hun-jai stressing Korea's continued need for foreign investment. Further equity investment in Korean companies will help stabilize the country's highly leveraged corporate sector, Lee told reporters.
His remarks helped fuel heavy won purchases, which pushed the dollar down to 1,112.70 wom in intraday trading, the lowest the U.S. currency has seen since Nov. 27, 1997.
At the close the dollar was at 1,112.90 won, compared with 1,116.40 won the previous session.
The New Taiwan dollar also rose Wednesday, building on gains made the previous day, as investor sentiment continued to recover from the sell-off preceding and immediately following the weekend's presidential election.
At the close of trading in Taipei, the U.S. dollar was quoted at NT$30.711, down from NT$30.738 the day before. At $413 million, transaction volumes were less than one third the level seen during Monday's hectic session.
The Singapore dollar strengthened and the baht slipped back as dealers unwound long baht positions in the cross market.
"Over the last two days trading has been driven by a lot of talk about acquisitions, but most of it was on a preemptive, speculative basis," said a dealer at one U.S. bank in Singapore.
Market players, who earlier in the week had bought baht for Singapore dollars on rumors that Singapore Airlines was in talks to buy a stake in Thai Airways and that HSBC was looking to acquire Bangkok Metropolitan Bank, moved to close out their positions Wednesday, pushing the Singapore dollar up and the baht down.
Talk that the Monetary Authority of Singapore was closely watching exchange rates also helped to boost the Singapore currency, as traders covered their short positions, afraid of possible intervention to lift the Singapore dollar.
Late in Asia the U.S. dollar was quoted against the Singapore currency at S$1.7138, down from S$1.7191 the previous day.
Against the baht the dollar was at 37.830 baht, up from 37.820 baht.
On the Philippine Dealing System, the peso ended higher, with the dollar dropping to 40.895 pesos, from 40.963 pesos the day before.