Asian currencies to slip further in April-June
Asian currencies to slip further in April-June
SINGAPORE (AFP): All key Asian currencies will weaken further
against the U.S. dollar in line with the yen in the April-June
period, according to a poll of financial market players.
Close to 90 percent of the offshore foreign exchange and bond
traders and hedge fund managers polled by ANZ Investment Bank in
Singapore felt the yen would fall to 125-127 against the U.S.
dollar in the "near term," from its Friday close in New York of
122.75.
According to survey findings made available to AFP, slightly
more than two-thirds of the offshore participants forecast the
yen would dive to as low as 135 against the greenback in the
second quarter of 1999.
The poll also pointed to other key Asian currencies breaching
support levels in line with the weakening yen, which sank to a
three-month low of 123.75 last week after the central Bank of
Japan pumped more money into the banking system to revive the
economy.
Most Asian currencies fell against the dollar last week
compared to the previous week.
The Singapore dollar ended Friday at 1.7295 against the
greenback, the Thai baht at 37.60, the Indonesian rupiah at
8,920, the South Korean won at 1,242, the Taiwan dollar at 33.147
and the Philippine peso at 39.125.
Thio Chin Loo, currency strategist with Banque Paribas in
Singapore, also forecast weak Asian currencies against the
dollar, which she pointed out had gained about 10 yen in less
than a month.
"The trend towards a weaker yen is still intact," she said.
"The Japanese government's comfort zone is 120 to 130 yen so long
as it is not too volatile and its impact is not too severe on
other Asian currencies."
According to the ANZ Bank survey on the performance of Asian
currencies during the second quarter, an "overwhelming majority"
felt the Singapore dollar would plunge to a new trading range of
1.7800-1.8000 against the greenback.
Slightly more than two-thirds saw a depreciation of the baht
beyond 40 to the dollar and more than half those surveyed
forecast the rupiah plunging past 10,000 against the dollar.
The currency is expected to be particularly volatile in the
run-up to Indonesia's June parliamentary elections.
More than two-third of the participants believed the peso
would slip to 42-43 against the dollar.
Almost all believed the central Bank of Korea would try to
keep the yen at 10.00 won or higher, thus pushing the won to a
lower trading range of 1,280-1,330 against the dollar.
Slightly more than half of the respondents expected the
Taiwan central bank to tolerate a faster depreciation of its
currency to support exports.
Some others felt the Taiwan dollar would dip to the 34.20-to-
34.40 range against the greenback.
The poll also found most respondents predicting a stable
Chinese yuan and the Hong Kong dollar's peg to the greenback to
remain intact during the second quarter.
Song Seng Wun, regional economist at G. K. Goh Stockbrokers
Pte. Ltd. here, said the greenback's strength arising from the
robust U.S. economy would keep Asian currencies down for some
time.
He said that U.S. exports, largely machinery and transport
equipment, to U.S. multinational companies (MNCs) in Asia,
especially Singapore, Thailand and Indonesia, had shot up sharply
in December.
"This can only suggest that U.S. MNCs in Asia are confident of
U.S. economic prospects because ultimately their re-exports go
back home," Song said.
"Conversely, the profile for most Japanese corporations in
Asia is the opposite."