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.