Asian monies mixed, won falls on yen decline
Asian monies mixed, won falls on yen decline
SINGAPORE (Dow Jones): A surprise interest rate cut by the Bank of Japan Wednesday pulled down the yen and the South Korean won along with it, while other regional currencies were mixed in lackluster trade.
The Singapore dollar and Indonesian rupiah were almost unchanged, while the Thai baht and Philippine peso were marginally lower.
The Indonesian rupiah closed slightly higher in volatile trading Wednesday as rising rupiah interest rates led foreign banks to unload their long-dollar positions, dealers said.
The dollar closed at Rp 9,820 in the spot market, down from Rp 9,855 Tuesday, after trading between Rp 9,820 and Rp 9,883.
Dealers said several foreign banks in Jakarta unloaded their long-dollar positions as the overnight rupiah interest rate in the interbank money market jumped to 15 percent from 12.5 percent Tuesday, and the overnight swap premium rose to 15.5 percent.
The rate jumped up because of the rupiah shortage in the money market following active dollar buying Monday and Tuesday.
"Foreign banks were short rupiah so that they unloaded their dollar long positions," said a dealer with a local bank.
The rupiah was also helped by dollar selling by state banks, which were believed to have sold between $40 million and $50 million Wednesday on behalf of Bank Indonesia.
With the Japanese economy teetering on the brink of recession, the BOJ announced it was cutting its overnight call rate to 0.15 percent from 0.25 percent and its official discount rate to 0.25 percent from 0.35 percent in an attempt to stimulate growth.
The BOJ made its move after the government released weaker- than-expected industrial production figures for January, and the Nikkei stock index closed at a 28-month low.
The dollar, which was trading around 115.90 yen before the BOJ announcement, shot up to Y116.60 after the central bank's statement was released.
The won, which often mirrors movements in the yen, also was hit by a wave of selling. The dollar rose from its intraday low of 1,248.3 won before the announcement to 1,250.0 won, where it remained until the close.
The weakness in the Japanese economy will keep pressure on the yen in the medium term, said Peter Redward, currency strategist at Deutsche Bank in Singapore. He is forecasting the dollar to rise to Y130 over the next 12 months.
While the won will suffer as a result of the yen weakness, the damage to the South Korean currency won't likely be as severe, Redward said.
The won, and to a lesser degree the New Taiwan dollar, frequently follow moves in the yen because South Korea and Taiwan compete with Japan in many of the same export markets.
The impact of the BOJ rate cut on the New Taiwan dollar wasn't known because markets in Taiwan were closed Wednesday for a holiday.
Prospects for slower economic growth in Thailand and the sinking yen weighed on the baht.
The Bank of Thailand has revised downward its economic growth forecast range for 2001 by a full percentage point to 3.0 percent-4.5 percent
Late in Asia the dollar was quoted at 43.025 baht, up from 42.825 baht late Tuesday.
The Singapore dollar ended little changed after opening higher on the liquidation of long U.S. dollar positions in New York. The Singapore currency gave up most of the its gains later in the day on the heels of the yen's decline.
Late in Asia the U.S. dollar was quoted at S$1.7425 compared with S$1.7427 late Tuesday.
The Philippine peso was pressured by moderate month-end dollar-buying by companies squaring their books.
The dollar closed at 48.280 pesos on the Philippine Dealing System, up from 48.265 pesos Tuesday.