Asian monies mostly up, rising with yen
Asian monies mostly up, rising with yen
Netty Ismail, Dow Jones, Singapore
Most Asian currencies were stronger late Tuesday, as the Japanese yen's continued recovery offset the market's somber contemplation over the prospects of a U.S. economic recovery, observers said.
The yen's rise gained momentum after China issued its strongest warning yet over the yen's recent downdraft to three- year lows.
At 0900 GMT (4:00 p.m. Jakarta time), the dollar was quoted at 131.20 yen, below 132.01 yen late Monday in New York. The yen hit a new three-year low of 133.40 yen last Wednesday.
The Singapore dollar surged as market participants trimmed their long U.S. dollar positions, triggering stop-loss orders along the way, dealers said.
"There was long-liquidation by U.S. and U.K. funds," said a dealer at a European bank.
He warned, however, that the selling in the U.S. currency was overdone, and could provoke intervention by the Monetary Authority of Singapore.
The central bank has, however, appeared to tolerate the currency's movements - at least for now.
"Based on the Singapore dollar trade-weighted index, it seems to me that the Singapore dollar is a bit too strong," the dealer said.
The U.S. dollar skidded to S$1.8253, down sharply from S$1.8383 late Monday.
The Thai baht's gains lagged behind those of the Singapore dollar and yen.
There were suspicions that the Thai central bank was checking the baht's strength, in part to maintain the competitiveness of the country's exports, dealers said.
Dealers believe the Bank of Thailand has been buying dollars daily since late last week via a Japanese bank in Singapore.
Late in the day, the dollar was fetching 43.870 baht, down marginally from 43.900 baht late Monday. For most of the day, the dollar traded above 43.900 baht - a level that the central bank appeared to have supported in recent sessions.
On the Philippine Dealing System, the dollar ended at 51.255 pesos, down from PHP51.345 Monday.
Bucking the trend in the region, the South Korean won succumbed to heavy foreign equity fund outflows, dealers said.
As the won's movements decoupled from the yen's, the Japanese currency recovered above the psychologically important 10.00 won mark for the first time in a week. The dollar was fetching 10.05 won late Tuesday, up from 9.94 won late Monday.
Against the U.S. dollar, the won finished at 1,316.9 won, weaker than Monday's close at 1,312.3 won.
Foreign investors dumped some KRW294.2 billion in shares, sending the benchmark stock index reeling by 3.4 percent to a close of 718.64 points, its lowest finish since the end of last year.
Market participants who had bought currencies like the won, on hopes that the country is well-positioned to gain from a U.S. economic rebound, unwound their positions as such optimism faded, observers said.
"There was an unwinding of these reflation trades that were put on at the end of last year and early this year," said Mansoor Mohi-uddin, a regional currency strategist at UBS Warburg.
U.S. Federal Reserve Chairman Alan Greenspan's cautious comments on the economy at the end of last week served as a reality check on the market, dashing hopes for a speedy U.S. economic recovery.
In his downbeat assessment on the U.S. economy, Greenspan had emphasized the risks to growth and corporate profits.
Adding to the somber mood in Seoul's markets, South Korean Finance and Economy Minister Jin Nyum said Tuesday that it would be difficult for the country to see a genuine recovery in exports and capital investment during the first half of 2002, according to Yonhap News Agency.
But he added that the government will nevertheless seek to attain a "reasonable" economic growth rate in the first half through fiscal and financial policies.
The Indonesian currency was steady around 10,390 rupiah to the dollar, compared with 10,400 rupiah late Monday.