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.