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.