Intervention steadies U.S. dollar in Asia
Intervention steadies U.S. dollar in Asia
Dow Jones, Singapore
The struggling U.S. dollar stabilized against Asian currencies
Thursday with the help of foreign exchange market intervention by
monetary authorities in South Korea and Taiwan.
The U.S. dollar finished Asian trading hours little changed
against the won, New Taiwan dollar, Singapore dollar and Thai
baht, after falling to multimonth lows against all four a day
earlier. The Indonesian rupiah and Philippine peso weakened.
However, any strengthening of the U.S. dollar is likely to be
short lived because the underlying sentiment in global markets
continues to be biased heavily against the U.S. currency,
analysts said.
U.S. dollar buying by state-run Korean banks saved the U.S.
currency from posting a new low against the won. The state run
banks swung into action after the U.S. dollar fell to around
1,172 won early in the session after closing a 19-month low of
1,179.4 won a day earlier.
Traders said they believed state-run banks bought around $500
million on behalf of the government. The move helped the U.S.
currency rebound to close at 1,179.5 won.
A senior Bank of Korea official later hinted at the
government's involvement in the round of U.S. dollar buying,
saying it is "natural" for the government to take actions to
stabilize exchange rates "when market participants lose their
balance."
Governments in Korea, Taiwan and Japan have all intervened
either directly or indirectly in foreign exchange markets
recently to slow the rise of their currencies.
Authorities have expressed concern that rapid appreciation of
their currencies could undermine the price competitiveness of
their exporters in global markets.
The Singapore dollar tracked its north Asia counterparts to
remain steady against the U.S. dollar.
Late in Asia the U.S. dollar was quoted at S$1.7502, compared
with S$1.7505 late Tuesday.
An announcement by the Monetary Authority of Singapore that it
will maintain its neutral policy on the Singapore dollar on a
trade-weighted basis for the balance of 2002 had little immediate
impact on the currency.
However, over the longer term it means there will be room for
the currency to continue appreciating against the U.S. dollar,
analysts said.
JP Morgan is targeting the U.S. dollar to fall to S$1.72 by
the end of September and S$1.70 by the end of December.
Singapore's large current account surplus, healthy foreign
reserves, and balanced budget are all supportive of the local
currency because they make Singapore less vulnerable to
volatility in global capital flows, she said.
Against the New Taiwan dollar, the U.S. currency closed at
NT$33.284 compared with NT$33.282 Wednesday.
The central bank, which regularly intervenes in the market to
smooth out volatility, bought around US$700 million throughout
the day, dealers said.
The New Taiwan dollar would have substantially eclipsed its
14-month high set Wednesday if not for the central bank's actions
to prop up the U.S. dollar, one trader said.
Against the rupiah the U.S dollar broke through the key Rp
9,000 resistance level for the first time in six sessions.
A 1.4 percent decline in the main index of the Jakarta Stock
Exchange and U.S. dollar short covering weighed on the rupiah.
At the end of Jakarta trading the U.S. dollar was quoted at a
two-month high of Rp 9,125, up from Rp 8,915 late Wednesday.
Bank Indonesia, the central bank, was rumored to have sold the
U.S. currency to try to keep the rupiah below 9,000 per U.S.
dollar, traders said.
The U.S. dollar traded in a narrow range against the baht,
finishing the session at 41.160 baht, compared with a 22-month
low of 41.150 baht Wednesday.