Asian monies fall due to outflow
Asian monies fall due to outflow
HONG KONG (Dow Jones): Asian currencies slipped further against the U.S. dollar during local trading hours Thursday, as foreign investors accelerated the withdrawal of funds from the region.
The won was hit hard, as asset repatriation drove the U.S. dollar to its highest level against the South Korean currency in more than two months.
The Taiwanese, Thai and Indonesian currencies were also dragged lower, as dealers also reported net outflows of investment funds from those markets too.
"We are seeing net asset sales across the region," said Steve Chang, Hong Kong-based foreign exchange manager at State Street Bank, a major global custodian which closely monitors portfolio investment flows.
In Korea a combination of higher interest rates, fears pricked by the Daewoo Group's cash-flow crisis and nervousness over broader regional tensions triggered a won sell-off which drove the U.S. dollar as high as 1,209.50 won in intraday trading, the highest level it has seen since mid-May.
"Some foreign funds have been pulled out of the stock market and repatriated. The amounts are not huge, but the sales do send a strong signal to the foreign exchange market," said the treasurer at one major U.S. bank in Seoul.
By the end of domestic trading, the U.S. dollar had eased slightly from its earlier high to close at 1,208.30 won, up from 1201.00 won at the end of Wednesday's session.
Dealers said the rise in forward rates partly reflected the market's belief that won interest rates are heading higher following the recent rise in domestic bond yields.
Elsewhere net outflows of foreign funds from the Taipei stock market whittled away at the New Taiwan dollar as relations between Taiwan and China remained fraught with tension.
At the close of local trading, the U.S. dollar had edged higher to NT$32.285, up from NT$32.281 the day before.
In Southeast Asia, both Thailand and Indonesia saw fund outflows dragging local currencies lower.
Dealers at Thai banks reported sizable baht sales by U.S. investment banks. They said foreign investors were pulling assets out of Thailand in response to the heavy first half losses announced by Thai banks.
Late in Asian trading, the U.S. dollar had risen to 37.3050 baht, up from 37.1850 baht toward the end of Asian hours Wednesday.
According to a senior dealer at one Thai bank the outflow has sufficient momentum to drive the U.S. dollar higher still over coming days to levels around 37.50 baht or 37.60 baht.
Net outflows also dragged the rupiah lower on Thursday.
As rupiah yields dipped to their lowest level since the start of Indonesia's economic crisis two years ago, some market players liquidated long rupiah positions in the belief that the rewards of holding the currency no longer adequately compensate them for the risk involved.
Late in Asian dealing, the U.S. dollar had climbed to Rp 6,767, up from Rp 6,717 the day before.
Following Wednesday's auction of Bank Indonesia paper, which saw the one month yield drop to just 14.57 percent, the implied yield on three month dollar/rupiah forwards traded as low as 13.6 percent Thursday, compared with levels above 60 percent seen six months ago.
The Singapore dollar, however, continued to attract buying interest Thursday, with heavy U.S. dollar offers seen capping the U.S. currency at S$1.7000.
Despite the interest, the Singapore dollar was at S$1.6985 versus the U.S. currency late in the Asian session, a bit weaker than S$1.6980 the previous day.
The Philippine peso held its own, with the U.S. dollar, ending the domestic session at 38.450 pesos, unchanged from the day before.