Asian currencies up late as U.S. attacks bruise dollar
Asian currencies up late as U.S. attacks bruise dollar
SINGAPORE (Dow Jones): Asian currencies received a boost late Wednesday, after Tuesday's terrorist attacks in the U.S. sent the dollar reeling in global foreign exchange markets and threatened to smash the already fragile confidence in the U.S. economy.
But trading was extremely thin as shell-shocked participants largely stayed on the sidelines, dealers said.
The interbank market in Singapore ground to a halt, leaving participants to trade via brokers and electronic broking systems, dealers said.
"There's nothing we much we can do," said a dealer at a European bank. "Liquidity is bad. If we're holding big positions, we're just trying to get out slowly."
Several central banks in the region - including authorities in Japan, Singapore and Korea - early in the day assured the markets they were prepared to offer additional liquidity to the banking system.
Position-squaring dominated trading, as market participants focused on ensuring transaction settlements were going through smoothly. Dealers said there were no reports of any major hiccups so far.
The cloud of uncertainty is expected to persist, and the dollar likely to remain wobbly, as observers consider the economic implications of the attacks in New York and Washington and wonder about how the U.S. government would retaliate.
Hijacked planes destroyed New York's two tallest buildings, and crashed into the Pentagon, badly damaging the headquarters of the U.S. Department of Defense.
"We don't want to be opportunistic to take advantage of the situation and hammer the U.S. dollar. Emotionally it's wrong, politically it's wrong, even though economically, it's right," said a dealer at a European bank.
Foreign exchange participants were bracing for a collapse in U.S. stocks when the equity market resumes trading, expected Thursday, dealers said. Trade was suspended Tuesday.
Following the attacks, the U.S. Federal Reserve is expected to act swiftly and aggressively to calm financial markets and cushion their blow on the economy, market watchers said. Already, talk of emergency rate cuts of at least 25 basis points, as early as this week, has swirled around the market.
But such expectations didn't quell jitters of a likely downdraft in U.S. stocks anticipated Thursday, with most Asian stock markets tumbling Wednesday. Stock markets in Kuala Lumpur and Bangkok were closed Wednesday following the overnight attacks. The impact of the region's equity losses on the region's currencies was, however, muted, with participants focusing on the dollar's fate, dealers said.
Fears of, if not actual, intervention by the region's monetary authorities pulled Asian currencies off their intraday highs, dealers said.
Dealers believed intervention by the Monetary Authority of Singapore pulled the Singapore dollar off its nine-month high of S$1.7260, set overnight following the attacks on the U.S.
Some dealers suspected the central bank intervened again Wednesday in Asia, when the U.S. dollar was quoted around S$1.7340.
At 0937 GMT (4:37 p.m. at Jakarta time), the Singapore dollar was quoted at S$1.7376 against its U.S. counterpart, stronger than S$1.7539 late Tuesday in Asia.
The Indonesian currency was at Rp 9,060 per dollar, firmer compared with Rp 9,095 late Tuesday.
Taiwan's central bank bought an estimated US$800 million - around US$300 million in the last few minutes of trading - to push up the U.S. dollar from the intraday low of NT$34.403, said a dealer at a foreign bank in Taipei.
The U.S. dollar closed at NT$34.599, down from NT$34.684 Tuesday. Turnover swelled to US$1.27 billion from Tuesday's US$338.5 million.
In Seoul, the Finance and Economy Ministry said it would go all out "to ensure market stability through various measures if the won moves sharply from investors' uneasiness."
The dollar finished at 1,286.1 won, down from Tuesday's close of 1,295.8 won.
On the Philippine Dealing System, the dollar closed at 51.230 pesos, down from 51.300 pesos Tuesday.
The Thai currency was stronger at 44.435 baht per dollar, compared with 44.810 bath late Tuesday.