Asian monies mixed following Japanese, U.S. comments
Asian monies mixed following Japanese, U.S. comments
SINGAPORE (Dow Jones): Asian currencies were mixed against the
U.S. dollar in late trading Friday as markets digested the latest
economic and political comments out of both the U.S. overnight
and Japan during the trading session.
U.S. Federal Reserve Chairman Alan Greenspan said during
Thursday's New York trading session that U.S. interest rates
should probably be raised to waylay any "developing imbalances"
that could hurt a percolating U.S. economy.
"There was nothing unexpected in his comments," said a
currency strategist at a U.K. bank in Singapore. "It's only a
matter of timing now for when the Fed raises rates."
Most economists and currency strategists expect the Fed to
raise rates by 0.25 percent to 5.0 percent - either at the
Federal Open Market Committee's meeting June 30 or the following
one August 24.
While this would suggest the U.S. dollar might strengthen
against global currencies, a trader at a U.S. bank in Manila said
that "at the end of the day, the market has expected this and
discounted it in most Asian markets."
He added that traders and investors are instead watching how
the hoped-for resurgence in Asia's powerhouse, Japan, affects
regional foreign exchange and equity markets.
Asia's regional markets should benefit from a U.S. rate hike
or any Japanese move to keep the yen weak, analysts said.
"If the rate hike comes in and there is no sharp correction on
Wall Street, then it will be a huge favor for Asian markets,"
said Jimmy Koh, chief economist at IDEA in Singapore. "The funds
will continue to flow in to Asia as fund managers re-allocate
portfolios in favor of the region's undervalued assets."
He said the U.S. dollar looks range-bound against the yen in
the medium term, given the Bank of Japan's promise to guard
against yen strengthening.
"What we will have is an outperformance in Asia equity
markets, Koh said. "Given the low interest rate and weak currency
environment, the stock markets are rightfully way up at this
time, because it's the best place to put your money."
Nilesh Jasani, regional strategist at SG Securities in
Singapore, said the sudden attention being thrown upon Asian
markets means central banks are struggling to deal with capital
inflows. South Korea's reserves have surpassed $60 billion;
Thailand's are at $30 billion; and Singapore's are heading
towards $80 billion.
"All central banks are going to be busy fighting this upward
pressure on their currencies," he said.
In late trading, the U.S. dollar was trading at S$1.7075, up
from S$1.7035 in late Thursday.
"It appears the central bank (Monetary Authority of Singapore)
wants the U.S. dollar above S$1.700, but it will be a daily
fight, given the strong inflows and rising equity market," Jasani
said.
The Singapore Straits Times Index - up 104.8 percent in the
past 12 months - climbed another 9.2 points to 2066 points
Friday.
The U.S. dollar was also trading at 36.8650 baht, down a touch
from 36.8750 baht late Thursday. Traders said U.S. funds have
been eager to sell U.S. dollars, but Bank of Thailand buying
agents in Singapore are keeping support for the U.S. dollar above
36.83 baht.
On the Philippine Dealing System, the U.S. dollar was trading
at 37.810 pesos, up from 37.745 pesos late Thursday.
In North Asia, the U.S. dollar was trading at 1,163.7 won,
down a touch from 1,167.0 won late Thursday. The U.S. dollar was
also trading at 32.352 New Taiwan dollars, up from NT$32.252 late
Thursday.