Asian currencies test long term highs as liquidity dries
Asian currencies test long term highs as liquidity dries
HONG KONG (Dow Jones): Strong economic data, robust stock
market performances and the Japanese yen's run-up against the
U.S. dollar helped lift Asian regional currencies during local
trading hours Monday.
Positive sentiment propelled the Singapore dollar to its
highest level since January, while the Thai baht climbed to a
two-month high. The Indonesian rupiah also rose.
Hopes that the Korean government will successfully avert a
systemic crisis triggered by the collapse of the Daewoo group
lifted the won to a six-week high. The New Taiwan dollar
continued to inch higher, pushing doggedly upwards toward levels
unseen in more than two years.
Despite the strong performance of Asian currencies in recent
weeks, activity levels in regional foreign exchange markets are
suffering as liquidity dries in the approach to the end of the
year.
Dealers in Singapore complained that interest in trading in
Southeast Asian markets was subdued, even though both the
Singapore dollar and the baht hit medium-term highs.
Traders said sales of the U.S. dollar executed by local banks
were behind the U.S. currency's fall through the S$1.6600 level
in morning dealing.
However, major technical support at S$1.6580 held firm, and
the U.S. currency rallied above S$1.6600 again in late trading as
market dealers, nervous of provoking U.S. dollar-supportive
intervention by the local monetary authority, covered their
positions.
"It wasn't the central bank buying (U.S. dollars), it was just
normal market trading," said one dealer at a U.S. bank in
Singapore, in response to rumors that the Monetary Authority had
been in the market buying the U.S. currency at the day's low.
Late in Asian trading the U.S. dollar was quoted at S$1.6611,
down from S$1.6664 toward the end of interbank dealing Friday.
Liquidity in the baht spot market was also thin. Dealers
reported moderate sales of the U.S. dollar by bank traders
attempting to trigger stop-loss sales orders for the U.S.
currency believed to be positioned around 38.50 baht.
Their offers were insufficient to overcome dollar-buying
interest from Thai corporate customers, whose bids supported the
U.S. currency at its intraday low at 38.5500 baht.
Late in Asian dealing the dollar was still being offered at
38.5500 baht, down from 38.7150 baht late Friday.
Market optimism that multilateral lenders will soon resume
payments to Indonesia following the visit to the country this
week of a team of senior International Monetary Fund officials
boosted the rupiah.
Early trading saw the U.S. dollar sold down as low as 6,730
rupiah. The selling pressure failed to force the dollar below the
four-month low of Rp 6,700 set following last months elections,
however, and the U.S. currency recovered slightly during
afternoon dealing.
Toward the end of local interbank trading, the dollar was
quoted at Rp 6,762, down from Rp 6,902 late Friday.
With markets in Manila closed for the All Saints Day holiday,
there was no trading Monday in the Philippine peso.
As fears of a liquidity crisis receded, and a series of
economic data releases confirmed the strength of Korea's rebound,
won purchases pushed the dollar to a six-week low at 1,194.50
won.
At that level, however, the state-controlled Korea Export-
Import Bank and Korea Development Bank stepped into the market,
buying dollars to check any further won appreciation.
By the end of trading the bank's action had lifted the dollar
to 1,195.50 won, above its earlier low, but still down steeply
from 1,200.00 won at the close of Friday's session.
The New Taiwan dollar continued its slow march higher Monday.
Intraday trading saw the U.S. dollar sold as low as NT$31.726,
its lowest level since early December 1997. At the close of
domestic session, the U.S. currency was at NT$31.731, down from
NT$31.736 Saturday.