Asian monies weaker, hostage to yen and rupiah
Asian monies weaker, hostage to yen and rupiah
SINGAPORE (Dow Jones): Asian currencies declined against the U.S. dollar late Thursday, caught between the vagaries of the rupiah and the yen.
Regional currencies embarked on their downward trend late Wednesday in sympathy with the rupiah, and the yen's slide against the dollar in Asian trading Thursday ensured they would remain in their new lower ranges against the U.S. dollar, analysts said.
The U.S. dollar surged above 110 yen for the first time in five months after Moody's Investors Service Inc. said it has placed Japan's local currency rating on review for possible downgrade.
And with traders saying the dollar is likely to push higher to 112 yen in the coming week, the much-anticipated rally in Asian currencies won't be panning out in the near term, currency watchers say.
The Singapore dollar is perhaps the most hapless of the lot, contending with the mercurial political situation in Indonesia on the one hand and the more prosaic limits of its trade-weighted index on the other.
The U.S. dollar is quoted at S$1.7047 late Thursday, higher than S$1.7008 late Wednesday.
"Three currencies are working to push the Singapore dollar around: the yen, the euro, and the rupiah," said Steven Brice, treasury economist at Standard Chartered. "Between the three of them, the Singapore dollar will struggle to trade below S$1.70 against the U.S. dollar."
The U.S. dollar could cross the S$1.7100 level next week, he added.
The rupiah remains volatile as Indonesian political uncertainty refuses to abate, despite the peaceful removal of Gen. Wiranto from the presidential Cabinet and higher-than- expected fourth quarter economic growth.
"The outlook still remains clouded," said Mangal Goswami, vice president of economic research at ABN AMRO. "Investors are not fully convinced that the political and social instability has been completely addressed."
The U.S. dollar is quoted at Rp 7,415 late Thursday, stronger than Rp 7,375 late Wednesday.
"The rupiah will stay pretty volatile in the near term until the entire political picture is more clear," Goswami said.
The South Korean won also weakened against the U.S. dollar late Thursday, this time without any help from central bank.
The U.S. dollar is trading at 1,128.7 won late Thursday, higher than 1,123.35 late Wednesday.
Current account data showing a US$400 million trade deficit in January, together with the yen's weakness, managed to push down the won, which monetary authorities have been trying to weaken in recent weeks with verbal as well as actual dollar-buying intervention.
The Thai baht, the Philippine peso, and the New Taiwan dollar also have all declined against the U.S. dollar.
The U.S. dollar is quoted at 37.720 baht late Thursday, higher than 37.580 baht late Wednesday.
It closed stronger 40.573 pesos late Thursday, compared with 40.490 pesos late Wednesday.
The U.S. unit also ended at NT$30.711, up from NT$30.650 late Wednesday.