DJ Asian Currencies Higher Late;Dlr Outlook Remains Bearish
DJ Asian Currencies Higher Late;Dlr Outlook Remains Bearish
Alan Yonan Jr. Dow Jones Singapore
The dollar declined further against most Asian currencies Tuesday, reflecting the increasingly bearish global outlook for corporate America.
The South Korean won, New Taiwan dollar, Thai baht and Singapore dollar all strengthened to fresh multi-month highs. The Philippine peso also edged higher, while the Indonesian rupiah was unchanged.
Falling stock prices and a rash of accounting scandals in the U.S. have fueled a sharp decline in the dollar against most Asian currencies during past four months, and analysts say the currency has more room to fall.
"Looking at the big picture, the dollar's recent decline is nothing compared to the rise it has experienced (since the mid 1990s)," said Hui Chin Chong, currency strategist at JP Morgan in Singapore.
The Federal Reserve's trade-weighted dollar index, a broad measure of the U.S. currency's value, appreciated around 43 percent between 1995 and this February. Since then the index has fallen less than 3 percent.
"Using our long-term model, JP Morgan still sees the dollar as overvalued by 5 percent and 10 percent," Chong said.
JP Morgan is recommending investors take short dollar positions against many of the Asian regional currencies.
The Singapore dollar continued its advance, hitting a fresh 10-month high against its U.S. counterpart.
The U.S. dollar traded as low as S$1.7338 in the morning session, but edged up to S$1.7365 after the Singapore government issued disappointing export data for June.
However, the interest in the U.S. dollar quickly waned and by the end of the day it had fallen back to S$1.7351, down from S$1.7398 late Monday.
Government authorities in Seoul tried in vain to slow the won's rise as the currency strengthened to a new 20-month high.
The dollar closed at 1,171.8 won, down from 1,176.6 won Monday.
The dollar bounced off its intraday low of 1,169.5 won to a high of 1,176.5 won after state-run banks bought about $200 million in the open market on behalf of the government to offset brisk dollar sales.
The state banks entered the market after an official at the Ministry of Finance and Economy said the government "hasn't changed its will" to stabilize the dollar/won exchange rate.
But the overwhelming market sentiment against the dollar fueled selling that quickly erased most of the currency's gains.
Taiwan's central bank also continued its effort to cap the local currency's rise. U.S. dollar purchases by the central bank accounted for around two-thirds of the total US$1.06 billion total trading volume, dealers estimated.
Despite the intervention, the U.S. dollar fell to a fresh 14- month low of NT$33.100, down from NT$33.206 Monday.
Exporters, who generate a substantial amount of their earnings in U.S. dollars, aggressively sold the currency on fears that it would fall even further.
The dollar fell to a 23-month low against the baht after a fall through a 40.500 baht support level triggered stop loss selling.
Near the end of Asian trading the dollar was quoted at 40.350 baht, down from 40.720 baht a day earlier.
The next support level for the dollar is seen at 40.300 baht, and a break through that sets up a test of the key 40.000 baht level.
Against the peso, the dollar closed at 50.400 pesos on the Philippine Dealing System, down from Friday's close of 50.495 pesos.
Philippine financial markets were closed Monday for local elections.
The U.S. currency's slide against the peso was slowed by dollar demand from corporations, particularly the oil companies, traders said.
The rupiah closed off its lows after the government managed to raise $125 million through the sale of a small stake in PT Telekomunikasi Indonesia.
The dollar had traded as high as Rp 9,095 in early trade amid continued local corporate demand for the U.S. currency.
The prospect of foreign inflows associated with the sale of the Telekom stake pushed the dollar to Rp 9,040 at the close, unchanged from Monday.