Asian monies down on yen, HK$ peg anxieties
Asian monies down on yen, HK$ peg anxieties
Netty Ismail, Dow Jones, Singapore
The wobbly yen and persistent anxieties over the fate of the Hong Kong dollar peg pulled the rug from under Asian currencies late Wednesday, dealers said.
The risk premium on holding one-year Hong Kong dollar forwards shot up to 297-312 to the spot rate late in the day, compared with 215-240 late Tuesday.
This fueled "moderate buying" in the U.S. dollar against other Asian currencies, particularly the Singapore dollar, Thai baht and New Taiwan dollar, said a senior dealer at a European bank.
Expectations that the yen will suffer a relapse past 130 yen to the dollar in the new fiscal year starting April 1 - once repatriation flows ebb - also kept the U.S. currency buoyed against other Asian currencies, dealers said.
The dollar was quoted at 129.23 yen at 0845 GMT (3:45 p.m. Jakarta time), above 128.90 yen late Tuesday in New York.
Against the Singapore dollar, the U.S. currency was higher at S$1.8245, from S$1.8211 late Tuesday.
The Thai currency was weaker at 43.295 baht to the dollar, compared with 43.185 bath late Tuesday.
The New Taiwan dollar closed at NT$34.980 against its U.S. counterpart, compared with NT$34.947 Tuesday.
Dealers blamed the spike in the Hong Kong dollar forward premium on the yen's weakness and lingering doubts about the sustainability of the Hong Kong dollar's peg to the U.S. currency.
Remarks by Hong Kong Monetary Authority Deputy Chief Executive Tony Latter Tuesday defending the Hong Kong dollar peg as "the most appropriate monetary anchor for Hong Kong" failed to assuage the market's concerns. The Hong Kong dollar is pegged at HK$7.80 to the U.S. currency.
The South Korean won closed weaker at 1,320.5 won to the dollar compared with 1,318.5 won Tuesday, with continued foreign equity fund outflows adding pressure on the local currency, dealers said.
Changes made by the Philippine central bank to its tiering system on its key interest rates - effectively lowering these rates ahead of Thursday's monetary board meeting - further weighed on the peso, dealers said.
In a bid to encourage banks into lending to spur the economy, the central bank has made it more expensive for them to place their excess funds with the monetary authority.
This is expected to boost liquidity in the interbank system, and was perceived as an effective interest-rate cut.
The central bank announced Wednesday it was widening the tiering system on its reverse repurchase facility by adding new maturities and included special deposits for the first time. The tiering system was designed to pay lower interest rates on larger amounts put in the overnight borrowing facility.
The adjustment to the tiering system cast a shadow on the peso because it has narrowed the differential between Philippine and U.S. rates.
The dollar closed at 50.97 pesos, higher than 50.87 pesos Tuesday.
The Indonesian currency was unchanged from late Tuesday at Rp 9,975 to the dollar, as participants waited for the government to reveal the identity of the successful bidder for a 51 percent stake in nationalized PT Bank Central Asia.
Indonesian Minister of State Enterprise Laksamana Sukardi said Wednesday that the government has already picked the winning bidder, and plans to make an announcement later this week.