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."