Asian monies down on yen, rupiah pressures
Asian monies down on yen, rupiah pressures
Netty Ismail, Dow Jones, Singapore
Renewed strain on the yen and the Indonesian rupiah dealt a
double whammy to other Asian currencies late Tuesday, superseding
the market's recent fixation with the Sept. 11 attacks in the
U.S.
Participants have toned down their bearish views on the U.S.
dollar as they become less risk averse, leading them to shift
their attention back to the region's gloomy fundamentals.
In the wake of the deadly terrorist attacks in New York and
Washington, investors had sold dollars and sought refuge in safe-
haven investments like current account surplus currencies.
Uncertainty over how far the U.S. would go in retaliating for
the attacks and fears of a global recession had kept the market
wary.
But "the calm and logical response by the U.S. administration
has instilled a calmer mood in the financial markets, a U.S.
dollar positive factor," said BNP Paribas in a report.
As some of the "risk-aversion trades" - inspired last month by
the heightened global uncertainty - were being unwound, current
account surplus currencies like the Singapore dollar were
starting to get hit again, said Mansoor Mohi-uddin, a regional
currency strategist.
"We're not seeing any military action off our TV screens," he
said. "So people are switching to fundamentals again."
The absence of intervention by some of the region's central
banks Tuesday - in particular the Monetary Authority of Singapore
and the Bank of Thailand - also emboldened participants to push
the U.S. dollar higher, market watchers said.
Talk of intervention by these central banks last week had
hitherto restrained U.S. dollar bulls.
Renewed pressure on the yen and the rupiah prodded U.S. dollar
bulls into action again, dealers said.
At 0908 GMT (or 1608 p.m. Jakarta time), the U.S. dollar was
quoted at 120.71 yen, above 120.24 yen late Monday in New York.
The U.S. dollar was at 119.75 yen late Monday in Tokyo.
The Indonesian currency slumped past the psychologically
important level of 10,000 rupiah to the U.S. dollar to trade at
three-month lows on security concerns, sparked by rising anti-
U.S. protests in Indonesia.
The U.S. dollar was quoted at Rp 10,015 after trading as high
as Rp 10,120 earlier Tuesday. Late Monday, the U.S. dollar was at
Rp 9,880.
As it lost its appeal as a safe-haven currency, the Singapore
dollar felt the brunt of the selloff in the region's foreign
exchange markets, skidding to its lowest level in nearly two
months.
The absence of central bank intervention Tuesday when the U.S.
dollar hit S$1.7750 - the suspected level of intervention last
week - encouraged participants to push the U.S. currency higher,
triggering stop-loss orders, dealers said.
U.S. dollar bulls were, however, wary of steering the currency
toward S$1.7800 amid fears of provoking U.S. dollar sales by the
Monetary Authority of Singapore, given the precipitous fall in
the local currency, dealers said.
The U.S. dollar rose to as high as S$1.7790, before
stabilizing around S$1.7774 late Tuesday. The U.S. dollar was
quoted around S$1.7674 late Monday.
The Thai currency was quoted at 44.690 baht to the U.S.
dollar, weaker compared with 44.520 baht late Monday.
On the Philippine Dealing System, the U.S. dollar ended at
51.600 peso, higher than 51.400 peso Monday.
The central bank was rumored to have sold dollars around
51.600 peso earlier Tuesday to defend the local currency, dealers
said.
The New Taiwan dollar sagged as it succumbed to the yen's
weakness and a 4 percent plunge on the local stock market,
dealers said.
The U.S. dollar finished at NT$34.574, higher than NT$34.549
Friday, in dealings valued at US$244 million. Taipei's markets
were closed Monday for a national holiday.
The central bank, which regularly intervenes to smooth any
currency volatility, sold an estimated $100 million throughout
the session to cushion the New Taiwan dollar's fall, dealers
said.
South Korean markets remained closed for a three-day holiday,
and will reopen Thursday.
Asian currencies have largely priced in expectations of
another interest rate cut by the U.S. Federal Reserve, which has
been compelled to take a much more aggressive easing stance since
the Sept. 11 attacks.
The Fed is expected to cut interest rates later Tuesday, for
the ninth time this year, with most investors wagering on a half-
percentage-point reduction to 2.5 percent in the federal funds,
or overnight bank-lending rate.