Asian monies down on strong dollar demand
Asian monies down on strong dollar demand
Nirmala Menon, Dow Jones, Singapore
Asian currencies slid against the U.S. dollar late Friday as
market players covered short-dollar positions ahead of the
weekend.
Traders reported demand for dollars from oil companies hedging
against higher oil prices. Concerns about foreign equity outflows
from the region also weighed on regional currencies.
Worries about the pace of economic recovery in the region were
reignited after disappointing data from the U.S., and rather
downbeat remarks on the economy from Federal Reserve Chairman
Alan Greenspan.
But continued uncertainty about a U.S. led war against Iraq,
and its impact on oil prices means market players will be more
inclined to hold dollars, traders said.
"There's a bit of risk premium building in," noted Bhanu
Baweja, currency strategist at UBS Warburg in Singapore.
The Thai baht and the Singapore dollar were among the biggest
casualties Friday.
Demand for dollars from oil companies, and short-covering by
market players holding dollar/baht options dragged down the baht,
a senior trader at a Singapore-based Asian bank said.
Oil prices have risen in recent days following mounting
tensions between the U.S. and Iraq.
Late in Asia, the dollar was quoted around 42.695 baht, from
42.522 baht Thursday.
Meanwhile, U.S. dollar purchases by foreign funds pulled down
the local dollar as low as S$1.7656 - a level last seen on Aug.
10 - during the Asian session.
Late in Asia, the dollar was quoted at SS$1.7645, from
$S1.7592 previously.
Growing concerns that a prolonged war with Iraq would hurt the
economy also weighed on the local dollar, traders said.
The dollar closed at 52.230 peso on the Philippine Dealing
System, up from 51.970 peso Thursday.
In South Korea, dollar sales by exporters, and the yen's
firmer tone overnight caused the U.S. unit to slip below 1,200
earlier in the day.
The dollar ended at 1,203.8 won, up from 1,201.4 won Thursday,
after trading in a tight range between 1,198.5 won and 1,204.5
won during the day.
"We expect no big movements in the dollar in global markets,
which means the trading range could be even narrower" next week,
possibly between 1,195 won and 1,205 won, said an economist at
Citibank.
Elsewhere, Indonesian companies bought the U.S. currency to
hedge their dollar exposure amid concerns over tensions between
the U.S. and Iraq.
The market remained on tenterhooks as the U.S. kept its
embassy closed in Jakarta Friday for the fourth day due to
security threats from unidentified groups thought to be linked to
al-Qaida.
The market is also concerned U.S. companies in Indonesia may
face attacks from militant Muslim groups if the U.S. attacks
Iraq, traders said.
The central bank was believed to have sold the dollar in the
market earlier in the day to defend the rupiah, but the amount
wasn't enough to curb the U.S. unit's rise.
Bank Indonesia has said it will intervene if necessary to
support the rupiah but it doesn't confirm specific interventions.
The dollar closed at Rp 8,965, up from Rp 8,915 Thursday.
In Taiwan, a late spate of U.S. dollar buying by importers
kept the U.S. currency steady against the local dollar, which had
earlier tracked the yen's firmer tone.
The dollar closed at NT$34.410, unchanged from Thursday.