Asian monies mostly up, S'pore dollar bounces back
Asian monies mostly up, S'pore dollar bounces back
Dow Jones, Singapore
The Singapore dollar bounced back strongly on Thursday after a sharp early fall in the wake of a de facto easing of monetary policy and weaker-than-expected second-quarter economic data.
South Korea and Indonesia also eased policy, but the moves produced scarce impact on their currencies. The South Korean won finished marginally stronger and the Indonesian rupiah was slightly weaker.
Elsewhere, the New Taiwan dollar, the Philippine peso and the Thai baht were modestly higher. The central banks of the three economies had already slashed rates since the U.S. Federal Reserve's 25-basis-point rate cut last month.
Early on Thursday, the Monetary Authority of Singapore (MAS) lowered its target for the Singapore dollar by "re-centering" its trading band for the currency around the current exchange rate - which is near the bottom of the undisclosed band - while keeping official policy neutral.
The MAS uses the exchange rate as its primary monetary-policy tool.
"By re-centering the band and keeping the same width of the band, they are lowering the potential low point for the Singapore dollar on a trade-weighted basis, and that is easier policy," said Bhanu Baweja, currency strategist with UBS Warburg.
The U.S. dollar unit rose as high as S$1.7608 on the news as market players took the view that the central bank will tolerate a weaker currency. But it fell back to S$1.7510 late in Asia, down from S$1.7552 late on Wednesday.
Some dealers suspected the MAS might have quietly sold the U.S. currency to smooth out excess volatility after its jump above S$1.7600.
Meantime, the dollar closed at a new five-month low against the South Korean won at 1,178.4 won, down from 1,179.1 won on Wednesday, after a session spent locked in a very tight range.
The New Taiwan dollar was buoyed by inflows of foreign funds to buy local shares, but gave up most of its gains toward the close of trading on what traders suspected to be intervention by the central bank.
The U.S. unit ended at NT$34.341, slightly down from NT$34.350 in the previous session.
A local bank trader said the central bank, which intervenes in the market from time to time, is believed to have bought US$600 million during the day to offset strength in the local dollar.
The Indonesian rupiah fell as market players trimmed long positions to lock in profits, and also on bids for the dollar from local importers, dealers said.
The dollar closed the local session at Rp 8,220 rupiah, up from Rp 8,195 on Wednesday.
The market ignored Bank Indonesia's cut in its overnight money market rate to 9.00 percent from 9.75 percent as it was widely expected. Bank Indonesia has been cutting rates amid easing inflation to help spur the economy.
The Philippine peso's gains were tempered by a bomb explosion in the troubled southern island of Mindanao, traders said. The dollar ended at 53.410 peso on the Philippine Dealing System, down from 53.430 peso on Wednesday.
As against the Thai baht, the dollar was quoted around 41.64 baht late in Asia, down from 41.70 baht on Wednesday.
Bank of Thailand Governor Pridiyathorn Devakula said the central bank will let market forces determine the baht's movements, following the recent cut in its policy interest rate.
The central bank cut its 14-day repurchase rate by 50 basis points to 1.25 percent on June 27 to stem strong capital inflows which had pushed up the baht.
"The inflow slows to a trickle (after the rate cut), but overall it is stable," Pridiyathorn told reporters.