Asian monies lower for fourth day running
Asian monies lower for fourth day running
SINGAPORE (Dow Jones): For the fourth day running Thursday,
Southeast Asian currencies ended local trading hours weaker
against the U.S. dollar.
As the U.S. currency extended its bullish trend against the
yen, the South Korean won, the New Taiwan dollar and the freely
traded currencies of Southeast Asia all came under steady
downward pressure.
As the dollar breached 122.00 yen, to hit a high in Asia of
122.78, the U.S. currency also rose powerfully against the won.
One point in intraday trading saw the U.S. dollar propelled as
high as 1,243 won, its strongest level against the Korean
currency since the beginning of December.
According to dealers, the won's plunge was driven primarily by
U.S. dollar-buying originating within the domestic market.
"On a short-term day-to-day basis, the won is very tied to the
yen," said Chia Woon Khien, regional treasury economist at
Skandinaviska Enskilda Banken in Singapore.
"This is mainly a yen story," agreed Steven Xu, treasury
economist at Standard Chartered Bank in Singapore. "Because of
the competitiveness issue, Korean policy-makers have made no
secret of their intention to keep the yen/won cross rate above
10.00 won."
Because of the close trading links between South Korea and
Japan, many of the commercial flows in and out of Korea are
priced in yen, leaving the economy highly vulnerable to swings in
the Japanese currency's exchange rate, Chia explained.
At the close of domestic trading Thursday, the U.S. currency
was quoted at 1,239.50 won, up from 1,229.40 Wednesday.
"If the yen can stabilize at around 125 (to the U.S. dollar),
then the won should stabilize at around 1,200," she said, arguing
that the U.S. dollar's current rally against the Korean currency
is overextended.
Similar pressures also forced the New Taiwan dollar lower
Thursday, with the U.S. currency rising to end local trading at
NT$33.250, up from NT$33.050.
"The same theme is being played out in Taiwan. The
monetization of domestic debt will result in a weaker currency,"
said Xu at Standard Chartered, who forecasts that the U.S. dollar
will climb to NT$34.50 over the medium term.
Xu compares Taiwan with Singapore, both of which are
relatively small economies, highly dependent on their external
sectors.
Against the Indonesian rupiah, the U.S. currency ended Asian
trading hours at Rp 8,885, little different from Rp 8,870 at the
same time the previous day.
In Singapore, where local money-market rates remain around 2
percent, the U.S. dollar ended trading hours at S$1.7341, down a
touch from S$1.7345 late the day before.
Traders said that, despite being sold down against the U.S.
dollar, the local currency received support from position-
unwinding in the regional cross-currency markets.
Although the position-unwinding propped up the Singapore
dollar, it exacerbated the downward slide of other regional
currencies, including the Thai baht and the Philippine peso.
Against the baht, the U.S. dollar ended Asian hours at 37.6750
baht, up from 37.6550 Wednesday.
Against the peso, the U.S. dollar closed at 39.220 pesos,
compared with 39.065 at the end of Wednesday's session.