Asian monies mostly down in tight ranges
Asian monies mostly down in tight ranges
Dow Jones, Singapore
Asian currencies fluctuated within tight, familiar ranges on Wednesday as market players were reluctant to take positions in the absence of strong leads.
The Singapore dollar, South Korean won, New Taiwan dollar, Thai baht and Indonesian rupiah were on a modestly weaker footing late in Asia. The Philippine peso was little changed.
"There's not much direction (in the market). People are unwinding (positions), waiting for the FOMC (U.S. Federal Open Market Committee) meeting," next week, said a trader at a European bank in Singapore.
Most people expect the FOMC to lower rates, but are unsure by how much, the trader said, adding earlier anticipation of a 50- basis-point reduction seems to now have given way to expectations of a 25-basis-point cut.
Speculation about a yuan revaluation, which gripped the market on Tuesday and was a factor behind the rise in Asian currencies in that session, appeared to have waned by Wednesday.
Market players are also very aware that central banks in the region aren't keen to see their currencies rise too much for fear of losing export competitiveness, traders and analysts said.
Asian central banks "have engendered sufficient fear (such) that appreciation continues to be limited," Bank of America said in a research note Wednesday.
The region's undervalued currencies are being used to stimulate demand, and given the low cost of doing so - for instance, there is no imported inflation to worry about - this trend will continue until there's a clear improvement in global economic prospects, the bank said.
The South Korean won snapped a four-day winning streak to end slightly lower, taking the lead from the yen's overnight decline, but supported by foreign buying of local shares.
The dollar ended at 1,184.8 won, up a touch from 1,184.0 won on Tuesday.
The Indonesian rupiah slipped as market players covered short- dollar positions, with the U.S. unit ending the local session at Rp 8,225, up from Rp 8,195 on Tuesday.
Speculators bought back the U.S. unit after it slid to an intraday low of Rp 8,190, an indication they aren't comfortable pushing the currency much lower.
Government officials have recently said the rupiah's rapid appreciation could hurt local exports.
However, dealers said underlying sentiment for the rupiah remains positive due to an improving macroeconomic outlook.
Supporting the market optimism, the central bank on Wednesday auctioned its one-month Sertifikat Bank Indonesia notes at a weighted average rate of 9.71 percent, lower than the 10.07 percent last week, due to the benign inflation outlook.
This marks the lowest level for the SBI rate since the 1997-98 Asian financial crisis. Falling rates are expected to reduce the cost to the government of bailing out local banks and free up more capital to be spent on development projects.
The New Taiwan dollar ended lower after failing to break a key level and on suspected intervention by Taiwan's central bank. That was partly offset by inflows into the local stock market, dealers said.
The U.S. unit finished at NT$34.545, up from NT$34.522 Tuesday.
Traders earlier tried to push the dollar below NT$34.50, and succeeded briefly before being stopped. After a few more attempts, they gave up and began to cover short positions.
"There simply wasn't enough momentum to push the Taiwan dollar any further," said a Taipei-based dealer.
The U.S. unit was quoted at S$1.7283 late in the local session, up from S$1.7268 late on Tuesday.
Trading was lackluster, with little reaction to a Moody's Investors Service report saying the city state's economic fundamentals remain strong despite a more difficult economic situation in the past few years.
The Thai baht weakened in tandem with its regional counterparts and short covering on the dollar on fears of central bank intervention, traders said.
The dollar ended the local session at an intraday high of 41.63 baht, up from 41.54 baht on Tuesday.