Asian currencies up late, led by Singapore dollar
Asian currencies up late, led by Singapore dollar
SINGAPORE (Dow Jones): Asian currencies were firmer Thursday, with the Singapore dollar racing up to a three-week high, following remarks by the de facto central bank suggesting the Singapore dollar may be allowed to appreciate.
Other Southeast Asian currencies found some reprieve from the Singapore dollar's strong gains and as players unwound their long U.S. dollar positions, currency watchers said.
Analysts, however, warned that the respite Thursday doesn't herald a recovery for most of Southeast Asia's beleaguered currencies, especially the Thai baht, as political and economic anxieties in some of these countries prevail.
Elsewhere, a reported intervention by Taiwan's central bank helped buoy the New Taiwan dollar, while month-end dollar selling by South Korean exporters lifted the won.
Remarks that the Monetary Authority of Singapore is prepared to allow a modest appreciation of the Singapore dollar in relation to the currencies of its major trading partners pulled the U.S. dollar below the S$1.7400 psychological support, dealers said.
Although inflation remains benign for the time being, the MAS is concerned by signs that it may rise in the future, Managing Director Koh Yong Guan said.
The market interpreted his comments to mean that the MAS probably finds the Singapore dollar undervalued, prompting them to unload their U.S. dollar positions.
Despite the MAS's suspected moves recently to defend Singapore dollar, market participants were nonetheless caught off guard, dealers said.
Around 0800 GMT, the U.S. dollar was at S$1.7350, its lowest level in three weeks. The U.S. currency was quoted around $1.7428 late Wednesday.
Strong corporate U.S. dollar-demand around S$1.7300 and the vulnerability of its Southeast Asian counterparts will, however, limit the Singapore's currency strength in the short term, dealers said.
After sliding to its lowest level in almost 10 months, the Thai baht, which became the latest prey this week to Southeast Asian bears, recovered as investors unwound their long dollar positions, dealers said.
The dollar retreated below the psychological support level of 41 baht to trade at 40.925 baht around 0840 GMT, down from 41.140 baht late Wednesday.
Analysts said the dollar will likely resume its uptrend to break 42 baht in coming months, amid political uncertainty ahead of Thailand general elections, which will likely take place in the fourth quarter of this year.
"We could see levels of 42 baht to 43 baht over the three- month horizon," said David Simmonds, a regional currency strategist at Salomon Smith Barney/Citibank.
"We are unlikely to see any major lurches in policy, but there's enough uncertainty about who will be in the new coalition government and who will lead it," he added.
In the rupiah market, reported dollar-selling by Indonesian state banks and long-liquidation in the U.S. currency boosted the Indonesian currency to Rp 8,963 against the dollar, compared with Rp 9,070 late Wednesday.
Sentiment on the rupiah has improved slightly, although players remained nervous about the political tensions in Jakarta ahead of the National Assembly, dealers said.
Indonesia's acting central bank governor Anwar Nasution confirmed Thursday the government will sign letter of intent with the International Monetary Fund Monday, which would pave the way for a $400 million disbursement from IMF's loan package to Indonesia.
In Manila, the dollar was at 44.865 pesos, down from Wednesday's close of 45.070 pesos.
The New Taiwan dollar closed higher as U.S. dollar-selling by the central bank countered the downward pressure from Taiwan's sluggish stock market, dealers said.
The U.S. dollar ended at NT$31.052, down from NT$31.061 late Wednesday.
The dollar finished at 1,113.40 won, down from Wednesday's close of 1,115.30 won.