DJ Asian Currencies Mixed Late; Volatility Dominates Session
DJ Asian Currencies Mixed Late; Volatility Dominates Session
Dow Jones Singapore
Asian currencies were mixed against the dollar Wednesday in a choppy trading session.
The U.S. currency weakened against the New Taiwan dollar, Philippine peso and Indonesian rupiah, while extending its gains versus the South Korean won and Singapore dollar.
The short-covering rally that sent the dollar soaring against Asian currencies a day earlier appeared to have largely run its course in some markets, leaving the U.S. unit vulnerable to renewed selling pressure, analysts said.
"The market has once again been caught out looking for a clearout of dollar shorts only to encounter good demand to sell the dollar into rallies," UBS said in a research note.
U.S. President George W. Bush also contributed to some of the dollar's weakness, vowing on Tuesday to press China and Japan to allow their currencies to move freely against the dollar.
Bush told reporters he will raise the issue with Japanese Prime Minister Junichiro Koizumi during a visit Friday to Tokyo and with Chinese officials during an economic summit in Bangkok next week.
The Thai baht recovered from a three-week low in morning trade to finish the Asian session modestly stronger against the dollar.
Near the end of Asian trading the dollar was quoted at 39.775 baht, down from 39.970 baht late on Tuesday.
The baht opened on a weak note following the Bank of Thailand's move on Tuesday to introduce further measures to discourage speculators from taking long positions in the Thai currency.
Central Bank Governor Pridiyathorn Devakula said the initial weakening of the baht after the new rules were unveiled showed that the policy was working.
However, after peaking at 40.240 baht in the first hour of trading, the dollar reversed course and proceeded to weaken for the balance of the session.
A trader at a local bank said exporters viewed the dollar's rise above the 40 baht level as a good selling opportunity.
The won fell for the second straight session after hitting a 35-month high against the dollar earlier in the week.
An official at South Korea's Ministry of Finance and Economy attributed the won's slide to market players covering "excessive short-positions" in the dollar.
The dollar closed at 1,170.5 won, up from 1,166.4 won late on Tuesday.
Suspected government intervention pushed the dollar to a six- week high of 1,175.0 won in afternoon trading before the rally
The U.S. dollar's rise against its Singapore counterpart in volatile trading fueled speculation that the Monetary Authority of Singapore intervened to support the U.S. currency.
Late in Asia the U.S. dollar was quoted at S$1.7375, up from S$1.7360 late on Tuesday in Asia. It traded between S$1.7330 and S$1.7470 intraday.
The U.S. dollar opened around S$1.7350 and quickly reached its session high of S$1.7470 on buying led mainly by large local banks, sparking speculation they were acting on behalf of the Monetary Authority of Singapore, dealers said.
The U.S. currency spent the rest of the session gyrating between S$1.7380 and S$1.7450, with market attention dominated by its moves against the Thai baht, dealers said.
A hands-off approach taken by Taiwan's normally interventionist central bank allowed the local currency to rise modestly against its U.S. counterpart.
The U.S. dollar ended at NT$33.900, down from NT$34.051 on Tuesday.
Trading volume totaled US$809 million, down from $1.16 billion in the previous session.
"The central bank wasn't as active (Wednesday), after its big move yesterday," a dealer at a foreign bank said.
The peso was buoyed by dollar remittance inflows from Filipinos working overseas.
The dollar closed at 54.620 peso on the Philippine Dealing System, down from 54.720 on Tuesday.
Many Filipinos working abroad traditionally increase their repatriation of funds in the fourth quarter to give family members more spending money for Christmas.
The peso will remain vulnerable, however, due to political concerns ahead of the presidential elections in May next year, analysts say.
The rupiah benefited from expectations of capital inflows into the local stock market.
The dollar closed at Rp 8,425, down from its close on Tuesday at Rp 8,450.
The ongoing initial public offering of a 36 percent stake in Bank Rakyat Indonesia, which is scheduled to close early next month, is expected to attract foreign investors' interest, helping the local currency.