Intervention forces won down as late buying lifts baht, rupiah
Intervention forces won down as late buying lifts baht, rupiah
HONG KONG (Dow Jones): Verbal intervention coupled with government-directed dollar buying forced the South Korean won lower for the second day running on Wednesday.
In Southeast Asia, regional currencies drifted sideways for most of the session, before a flurry of late dollar sales by market participants based in Europe pushed the Thai baht and the Indonesian rupiah up sharply to end the day higher.
The Korean Ministry of Finance and Economy sought to set its stamp on the day's trading in Seoul by issuing a statement minutes before the local market's open, declaring that "the won's appreciation is never desirable."
By the end of local trading in Seoul, the dollar had been driven up to close at 1,135.00 won, well above 1,133.30 won at the end of Tuesday's session.
Despite the dollar's advance against the won Wednesday, the majority of market participants retained their bullish view on the Korean currency. U.S.-based J.P. Morgan, for example, was sticking to its year-end exchange rate forecast of 1,100 won.
"That's a very aggressive target," conceded Chia Hsin-Li, Asian foreign exchange strategist at the bank.
Elsewhere in North Asia, the new Taiwan dollar closed marginally weaker, with the U.S. dollar edging higher to close at NT$31.640, compared with NT$31.637 at the end of Tuesday's session.
In Southeast Asia, regional currencies drifted sideways for most of the day before a late flurry of buying briefly lifted the baht and the rupiah.
"We saw some (dollar) selling when Europe opened," explained one Singapore based broker, saying that market players in London had sold the U.S. currency against baht, rupiah and Singapore dollar.
"But these are very thin markets and there are no big amounts going through. This was just some (dollar) longs selling to take profits and square off their positions before the end of the year," he said.
By the time Asian trading ended, the dollar had lifted a little from its earlier low against the baht of 38.4300 baht to trade at 38.4650 baht. Late Tuesday, the dollar had been quoted at 38.5550 baht.
Dealing was unaffected by the no-confidence debate in the Thai parliament, with most traders assured the government will survive unscathed.
News that the International Monetary Fund assistance program to Indonesia suspended in August will be superseded by a new extended program to run until November 2003 had no impact on foreign exchange dealings in Jakarta.
Late in the Asian day, the dollar was quoted against the rupiah at Rp 7,202, down from Rp 7,235 the day before.
Against the Singapore dollar, the U.S. currency closed at S$1.6790, flat compared with S$1.6787 the day before.
In Manila, the Philippine central bank's decision to raise its overnight lending rate to 12 percent from 11 percent in anticipation of increased funding demands over the new year had little effect on peso trading.
On the Philippine Dealing System, the dollar closed against the peso at 40.690 pesos, up from 40.665 pesos the day before.