Asian monies down, dollar questioned
Asian monies down, dollar questioned
Alan Yonan Jr., Dow Jones, Singapore
The dollar held its ground against most Asian currencies
Thursday, although many analysts questioned whether its recent
rally is sustainable.
After sinking to multi-month lows against several regional
currencies the dollar has stabilized over the past few sessions
as the outlook for U.S. equity markets has perked up.
With many players short dollars globally, the dollar rally
picked up steam quickly on short-covering against not only Asian
currencies, but those in Europe as well.
The latest batch of good news for the dollar came in the form
of a 7.8 percent surge in the NASDAQ Composite Index and a 3.1
percent rise in the Dow Jones Industrial Average overnight.
The dollar rallied to a two-week high against the yen early in
the Asian session, putting most other Asian currencies on the
defensive.
The Singapore dollar, Taiwan dollar, Philippine peso and Thai
baht all tumbled, while the Korean won edged higher. Markets in
Jakarta were closed for a public holiday and rupiah was confined
to illiquid offshore trade.
Near the end of Asian trading, the dollar was quoted at 128.85
yen, unchanged from late Wednesday in New York. The dollar had
hit a high of 129.15 yen early in the day before Japanese
exporters began selling the U.S. currency to hedge their foreign
exchange exposure.
Until it's latest rally, market sentiment was clearly running
against the U.S. dollar due to concerns about the strength of the
economic recovery in the U.S. and the sustainability of the
country's current account deficit.
"But for now it appears that the reversal will be short-lived
if U.S. equity markets cannot follow through and concerns
continue over the resilience of the recovery in the United
States," according to the bank.
The Singapore dollar bounced around for most of the session,
then slumped near the end of trading to finish at a one-week low
against its U.S. counterpart.
The U.S. dollar's stellar performance overnight helped it open
at a solid S$1.8095 in Asia. A bout of profit-taking pushed the
U.S. currency down to its intraday low S$1.8060 before it began
to climb again on the strength of its advance against the yen.
Near the end of Asian trading the U.S. dollar was quoted at
S$1.8114, up from S$1.8092 late Wednesday.
Traders in Manila said most banks took the dollar's rebound
against the yen and other currencies as a signal to cover their
short dollar positions against the peso.
The dollar closed at 49.890 pesos on the Philippine Dealing
System, up from 49.820 pesos Wednesday.
The Philippine market didn't react to comments from some
government officials that the budget deficit for the first
quarter may have exceeded the 52.9 billion pesos ceiling.
The government had warned the market earlier about front-
loading expenditures to stimulate the economy, so Thursday's
announcement didn't come as a surprise, Bank of America said in a
note to clients.
The New Taiwan dollar faced selling pressure both in the spot
market and the offshore market for non-deliverable forwards.
The U.S. dollar closed at NT$34.605, up from NT$34.588
Wednesday.
As was the case in other regional foreign exchange markets,
U.S. dollar short covering was the driving force behind the U.S.
currency.
The Thai baht traded in a narrow range, finishing marginally
weaker. Near the end of Asian trading the dollar was quoted at
42.950 bath, up from 42.945 bath late Wednesday.
The South Korean won managed to break from the influence of
yen weakness and finished stronger on the back of dollar selling
by exporters.
The dollar ended at 1,282.4 won, below Wednesday's close at
1,285.4 won.
Exporters normally offload dollars at the end of the month,
when they must balance their books. But the dollar's recent
volatility has prompted some exporters to sell the U.S. currency
on any price spikes.
The exporters' activity helped offset the negative effect on
the won resulting from net foreign sales of 96 billion won of
shares in the local stock market.