Asian monies mixed after doubt
Asian monies mixed after doubt
SINGAPORE (Dow Jones): Asian currencies turned in a mixed
performance Monday against the U.S. dollar, which remained
relatively well-bid against a backdrop of growing global economic
uncertainty.
The Indonesian rupiah closed flat Monday, recovering from day
lows, as investors realized a new offshore trading system failed
to affect the spot market.
The dollar rose to an intraday high of Rp 9,625 as investors
bought the dollar in anticipation of the start Monday of an
offshore non-deliverable forward market.
The rupiah NDF market is an attempt by offshore banks to get
around new Bank Indonesia rules which ban the transfer of rupiah
offshore, in an attempt to stop speculation against the local
currency in the forward market.
A rupiah NDF market gets around the rules as it settles
contracts only in dollars.
Investors bet Monday that NDF trading could have a negative
effect on the rupiah in the spot market.
Players want to use the NDF market to effectively short the
rupiah amid concerns over political stability. President
Abdurrahman Wahid's 15-month-old government is losing support in
Parliament, which wants him to step down over two financial
scandals.
As players take out positions against the rupiah in the NDF,
it will affect the rupiah spot onshore. It could also lead to
arbitraging between the different rates.
But investors made only a handful of trades on the NDF market
Monday, with volume under a total $5 billion.
The dollar recovered in later trade amid low volumes in the
NDF, ending Asian trading at 9,610 rupiah, unchanged from
Friday's close.
The South Korean won, which frequently tracks movements in the
Japanese currency because of the export competitiveness between
the two countries, was hit by both the falling yen and lower
stock prices on the local exchange.
The dollar closed at 1,246.9, won, up from Friday's 1,243.5
won finish.
Monday's downtick in the won followed last week's 1.5 percent
rise in the currency against the dollar.
The Thai baht weakened following the Bank of Thailand's move
Friday to tighten disclosure rules for foreign exchange traders,
and disappointment in Prime Minister Thaksin Shinawatra's cabinet
appointments announced over the weekend.
Late in Asian trading, the dollar was quoted at 42.620 baht,
up from 42.475 baht late Friday.
Currency traders had speculated that the Bank of Thailand was
considering Indonesian-styled soft currency controls. While that
turned out not to be true, Bank of Thailand did say it was
stepping up its monitoring of trading between onshore and
offshore parties.
Regarding the cabinet appointments, "they were criticized as
being too favorable to Thaksin's friends and to old guard
politicians," UBS Warburg said in a note to clients.
The New Taiwan dollar gained modestly as inflows of foreign
equity funds generated demand for the local currency.
The U.S. dollar closed at NT$32.290, compared with the
previous close of NT$32.299.
The fund inflows softened the impact of a 1.8% drop in the
island's stock market Monday, pulling the local currency off its
intraday low of NT$32.330 to the dollar dealers said.
The Philippine peso weakened as dealers covered their short
positions in the U.S. currency in thin trading volume.
The dollar closed at 47.850 pesos on the Philippine Dealing
System, up from 47.550 pesos at the previous close.
The Singapore dollar was stronger after the release of solid
January export data over the weekend.
Late in Asia the U.S. dollar was quoted at S$1.7373, down from
S$1.7409 late Friday in Asia.