Asian monies mostly up, S'pore $ recovers from MAS
Asian monies mostly up, S'pore $ recovers from MAS
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.
2. Dollar 2 X 24 U.S. dollar begins fightback against euro Dollar begins fightback against euro
The dollar has begun a fightback against the euro, but it needs a postwar economic bounce if it is to succeed in reversing a months-long decline, analysts say.
The euro has been pushed back to US$1.1344, down from $1.1581 at the start of this month and a record $1.1933 May 27.
But the single European currency remains at historically lofty levels.
Last year, the euro advanced 18 percent, breaking above parity with the dollar for the first time since shortly after its launch in January 1999 as traders fretted over the U.S. economy -- in particular a huge shortfall in the U.S. trade and financial account with foreign countries -- and global tensions.
Now, the balance may be tipping, analysts said.
Citigroup chief currency strategist Robert Sinche said he expected the euro to decline to $1.10 or lower by the end of this year.
He noted expectations that the European Central Bank would cut key interest rates this year, even though ECB president Wim Duisenberg has hinted there will be no lowering of euro zone interest rates when bank policymakers next meet July 10.
3. OIL 1 X 50 Oil prices still strong, Saudi fuels supply fears Oil prices still strong, Saudi fuels supply fears
Oil prices stayed firm on Thursday, supported by concern about inadequate supplies and the latest signs Organization of the Petroleum Exporting Countries (OPEC) kingpin Saudi Arabia was sticking to the cartel's agreement to curb output.
In London, benchmark Brent crude was trading two cents weaker at US$28.69 a barrel, close to the highest level since just before the Iraqi war in March, while New York light crude slipped a cent to $30.87 after closing on Wednesday at a three-week high.
Prices had strengthened on Wednesday after a U.S. government report showed a modest increase in U.S. crude and gasoline stocks but left supplies below normal.
"Both technically and fundamentally the market looks well supported in the short term," said Christopher Bellew of Prudential Bache brokerage.
"It could be the third or fourth quarter before stocks are normal again."
The strength of the market was underpinned by news on Thursday that Saudi Arabia's crude oil term allocations to major oil companies would be unchanged in August versus the previous month at 20 to 25 percent below full contractual volumes, according to industry sources.
After testing maximum capacity during the Iraq war, the OPEC, led by Saudi Arabia, has kept to a pledge to rein in output.
A Reuters survey found on Monday that production among the 10 OPEC countries with quotas fell by 660,000 barrels per day (bpd) in June to 25.97 million, not far above an official limit for the
4. ASIA 2 X 20 Asia 'on the way up', says Ferrero-Waldner Asia "on the way up", says Ferrero-Waldner
Asia is "on the way up" after its difficulties of recent years, said Austrian Foreign Minister Benita Ferrero-Waldner said in an interview published on Thursday.
After the economic crisis of 1997, the world crisis of the Sept. 11, 2001 terrorist attacks on the U.S., the terrorism in Bali, and the SARS lung disease epidemic, the nations of the Far East were turning to Europe again, she told the newspaper Standard.
Ferrero-Waldner's interview was published during a week with meetings in Vienna with three Asian foreign ministers, Hassan Wirayuda of Indonesia, Surakiart Sathirathai of Thailand, and Tyronne Fernando of Sri Lanka.
"We're always talking about the European Union enlargement here, but overlook the dynamic development in Asia", she said.
Ferrero-Waldner pointed out that there was 7.7 percent economic growth in China, seven percent in Vietnam, 6.2 in South Korea, and five in Thailand last year. Those were figures only equaled, if at all, by East European candidate-nations for EU membership.
Ferrero-Waldner drew parallels between European integration and the quickly-growing linkages among the Asian states. "They're following the model of the European Union, or at least the former European Economic Community", she said.
During Surakiart's visit, Ferrero-Waldner described Austria and Thailand as "gateways for economies and investment in Europe and Asia".
Thailand, and other large nations such as Indonesia, would profit from Austrian access to East Europe, she said. She also spoke of Austria's economic interests in Asia, for instance a 37 percent increase last year in exports to China, and the Austrian Siemens' manufacture of subway trains for Thailand's capital Bangkok.
"Asia is big on our map", Ferrero-Waldner commented.