Asian currencies up late as U.S. dollar loses luster
Asian currencies up late as U.S. dollar loses luster
SINGAPORE (Dow Jones): Asian currencies surged late Friday, as the U.S. currency continued its broad-based correction, prompting wrong-footed dollar bulls to further unwind their long positions, market watchers said.
The dollar has lost its luster amid concerns over a protracted economic stagnation in the U.S., the bulging U.S. current account deficit and the debate surrounding Washington's strong dollar policy. That, in turn, proved unsettling those who have long been bearish on Asian currencies.
The dollar weakened against all its major counterparts Thursday, tumbling 2 percent against the yen and 1.5 percent against the euro.
At 0900 GMT (4 p.m. Jakarta time), the dollar was at Y121.89, slightly stronger than Y121.65 late Thursday in New York. The euro was at $0.8952, up marginally from $0.8925 late Thursday.
"It's not Asian currency strength; it's basically dollar weakness," said Philip Wee, a market strategist at Singapore's DBS Bank.
Market watchers suspected that monetary authorities in Singapore, Taiwan and South Korea bought U.S. dollars Friday to curb the appreciation of their respective currencies.
The Indonesian rupiah ended higher against the dollar as President Megawati Soekarnoputri's choice of nonpolitical professionals to her cabinet continued to help sentiment.
Indonesia's central bank also sold dollars in very thin pre- weekend trade, dealers said. Total intervention amounted to only about $20 million.
The dollar closed Asian trade at its intraday low of Rp 9,110 rupiah, below Rp 9,125 Thursday.
But the dollar is unlikely to fall below Rp 9,000 next week as local companies with foreign debt will buy the U.S. unit at these lower levels, traders said.
The Singapore dollar resumed its recent precipitous rise, soaring 1.3 percent to a five-month high before retreating slightly on talk that the monetary authority had bought some US$150 million to US$250 million via a foreign bank, observers said.
Earlier, foreign funds had dumped U.S. dollars, triggering stop-loss sales in the U.S. currency which accelerated its fall, and sent it reeling to as low as S$1.7540, its weakest level since March 9, dealers said.
Late in the day, the U.S. dollar was quoted at S$1.7569, much lower than S$1.7769 late Thursday in offshore trade. Singapore markets were closed Thursday for the National Day holiday.
The yen's overnight jump boosted the South Korean currency to as strong as 1,278.5 won against the dollar in early trade, dealers said.
But the won's advance past the critical 1,280 won mark provoked state banks - believed to be acting on behalf of the central bank - to buy dollars, dealers said.
The dollar closed at 1,283.5 won, down from 1,288.4 won Thursday.
The New Taiwan dollar, too, received a fillip from the yen's overnight advance, though central bank intervention - it bought an estimated US$100 million - stymied its ascent, dealers said.
The U.S. dollar closed at NT$34.625, down from NT$34.662 Thursday.
On the Philippine Dealing System, the peso rose to a two-month closing high, dealers said. Regional currency gains, a two- percentage point rise in banks' liquidity reserve requirement and concerns that authorities will increase their vigil over foreign exchange transactions bolstered the peso.
The dollar closed at 51.850 pesos, lower than 53.000 pesos Thursday.
The bouyant mood in the region also spilled over into the Thai currency market, where the baht strengthened to 45.240 baht per dollar, compared with 45.450 baht late Thursday.