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.