Asian monies mostly down, wary of intervention
Asian monies mostly down, wary of intervention
Dow Jones, Singapore
Most Asian currencies gave up early gains to move to a weaker footing late on Tuesday as market players covered short-dollar positions after selling it down earlier in the session.
The Singapore dollar, Thai baht, Indonesian rupiah and New Taiwan dollar drifted lower. However, the Philippine peso and South Korean won eked out modest gains.
The dollar's recovery against regional units during the session surprised analysts and traders, who had expected the currency to come under pressure in the wake of the management shake-up at Freddie Mac and weaker U.S. share prices.
Concerns about central bank intervention appeared to be a major factor that helped crimp regional currencies' gains. The central banks are keen to rein in the strength of their currencies to keep exports competitive.
"The dollar opened lower (versus regional units) and then people took the opportunity to cover short positions. It's a whippy, two-way market," a Singapore-based European bank trader said.
Singapore's latest foreign exchange reserves data seemed to give credence to speculation that the Monetary Authority of Singapore had been supporting the U.S. dollar, analysts said.
The data, issued over the weekend, showed reserves rose $2.44 billion in May - the largest monthly gain in a couple of years, according to J.P. Morgan Chase Bank.
"While some of this reflects euro valuation effects and interest accrual, the underlying message is of strong U.S. dollar buying by the MAS," the bank said in a research note on Tuesday.
"It's definitely making people nervous. That's part of the reason why the dollar/Sing (Singapore unit) is well-bid today," noted Sameer Goel, a currency strategist at Bank of America.
Late in the local session, the U.S. dollar was quoted at S$1.7318, up from S$1.7285 late on Monday.
Against the Thai baht, the dollar was quoted around 41.80 baht late in Asia, up from 41.69 baht on Monday, taking a cue from its rise versus the Singapore currency.
Intervention fears also caused the Indonesian rupiah to reverse early gains. The dollar recovered from an intraday trough of Rp 8,155 to end the local session at Rp 8,210, up from Rp 8,195 on Monday.
Dealers said market talk of dollar buying by central banks elsewhere in the region helped push the U.S. unit up versus the rupiah.
In Taiwan, U.S. dollar demand from government-controlled banks helped weaken the local unit. Several dealers said the dollar buying was likely related to purchases of military equipment.
The U.S. unit ended at NT$34.677, up from NT$34.662 on Monday.
Dollar selling by foreign buyers of South Korean shares, and also exporters, pushed the won marginally higher, dealers said.
The dollar closed at a two-and-a-half week closing low of 1,194.5 won, down from 1,196.7 won on Monday.
The Philippine peso ended higher as exporters unloaded some of their dollar holdings when the U.S. unit began to gain ground during the session, traders said. The dollar ended at 53.365 peso on the Philippine Dealing System, down from 53.380 peso on Monday.