Asian monies turn in mixed showing
Asian monies turn in mixed showing
Dow Jones, Singapore
Asian currencies turned in a mixed performance on Monday as they recovered or trimmed early losses on the back of dollar selling.
Broadly stronger regional equities' markets provided support to the currencies, although upside was capped by concerns about central bank intervention.
The Singapore dollar, Indonesian rupiah and Thai baht were weaker late on Monday. The South Korean won, the New Taiwan dollar and the Philippine peso were stronger.
A Singapore-based trader at a European bank said the dollar started on a stronger footing against regional currencies but lost momentum later in the session.
"I thought it (the dollar) was going higher, so I was kind of surprised (when gains weren't sustained). The market started turning around" as participants started selling back dollars, he said. "The market is very short term. Nobody wants to be caught long (dollars)," the trader added.
The overall market was quiet, with trading thinned by holidays in Australia and some parts of Europe, traders said.
Some analysts said regional currencies may be losing steam after a strong run-up in recent weeks on the back of broad dollar weakness.
Firming oil prices, weak economic data and a general reluctance by regional central banks to see their currencies appreciate too fast - and hence erode export competitiveness - may well keep regional units on the defensive.
China's pegged currency regime, which gives it price advantage in the export market, is a "very strong motivating factor" for regional central banks to want to curb the strength of their own units, said David Simmonds, senior emerging markets strategist for Asia at Royal Bank of Scotland.
China pegs the value of the yuan to the dollar, allowing it to trade in a very narrow band.
With such factors at play, a weak dollar wouldn't necessarily translate into stronger regional units, Simmonds said. However, resilient equity markets combined with a weak dollar would be bullish for Asian currencies, he noted.
The South Korean won closed at a two-week high on a wave of dollar selling by exporters and foreign investors in the local stock market. Foreigners were net buyers of Korean stocks for an eighth straight session, net buying 223.7 billion won in shares.
The dollar finished at 1,196.7 won, down from 1,200.3 won on Thursday, marking its strongest close since May 23. South Korean markets were closed for a holiday on Friday.
The New Taiwan dollar ended modestly higher, helped also by foreign buying of local stocks. Foreign investors bought nearly NT$3.6 billion net in stocks Monday.
The U.S. dollar closed at NT$34.662, slightly down NT$34.665 Friday.
The Philippine peso snapped a four-day losing streak and finished higher on the back of remittance inflows and thin demand for dollars, traders said.
The dollar closed at 53.38 pesos on the Philippine Dealing System, down from 53.45 pesos on Friday.
Against the Singapore dollar, the U.S. unit was quoted at S$1.7285 late in the local session, up from S$1.7235 Friday, but off the intraday peak of S$1.7310.
The Indonesian rupiah weakened slightly as the market took a breather amid fears of central bank intervention.
The dollar closed local trading at Rp 8,195, marginally up from Rp 8,180 on Friday.
Speculative investors have been moving money into Indonesian stocks and bonds in recent months in search of high returns.
But the central bank has signaled it may intervene to protect exporters if the dollar falls much further. Traders said fears of such intervention are deterring investors from building up large short-dollar positions.
Intervention fears also kept the Thai baht on a weaker tone after the central bank bought dollars to rein in the currency Friday, when it rose to a fresh 10-month high.
Late in Asia, the dollar was quoted around 41.68 baht, up from 41.63 baht on Friday.