Most Asian currencies fell in late trade
Most Asian currencies fell in late trade
SINGAPORE (Dow Jones): Most Asian currencies came under
renewed pressure late Wednesday as many regional bourses felt the
pain from Wall Street's disappointment over the Federal Reserve's
interest rate cut, and as the Japanese yen resumed its descent.
The only currency that avoided getting sucked into the
downdraft was the Indonesian rupiah, which was steady as local
corporates held back their dollar demand and amid fears of
central bank intervention, dealers said.
The Indonesian currency was around 10,420 rupiah to the
dollar, unchanged from Tuesday.
The Fed's move Tuesday to lower short-term interest rates by
half a percentage point brings rates down a total of 1.5
percentage points this year. And officials made clear they are
prepared to do much more - possibly even before their next
official rate-setting session May 15.
With many investors hoping for a three-quarter point cut,
stocks plunged following the Fed's announcement. The Dow Jones
Industrial Average ended the day down 238.35 points, or 2.4
percent, to 9720.76, its lowest close since March 1999.
"The Fed still expects excess capacity to last for 'some
time,' although the inventory adjustment appears well underway,"
said DBS market strategist Philip Wee.
For the region's economies, which rely heavily on exports to
the U.S., "easier monetary policy is unlikely to be of much help
in supporting growth even if Asian central banks can respond with
lower rates," Wee said.
Foreign exchange participants, who had unwound their dollar
positions Tuesday to lock in profits, revived their dollar buying
spree Wednesday in most Asian currency markets, dealers said.
The currencies also felt another blow from the Japanese yen's
retreat below Y123 against the dollar, following its rebound
earlier this week.
"Asian currencies began rallying yesterday in anticipation of
a Fed cut, but any rally in Asia will be shallow or short-lived
without a rally in the yen," said Peter Redward, a regional
currency strategist at Deutsche Bank.
The currencies of South Korea and Taiwan - both of which
compete against Japan in similar export markets - felt the brunt
of the region's pressure.
The dollar ended at 1,305.3 won, up from 1,295.90 won Tuesday.
The New Taiwan dollar's fall to as low as NT$32.880 against
its U.S. counterpart heightened expectations of an imminent
descent toward the NT$33 level.
The New Taiwan dollar, however, regained its footing toward
the close of trading as the local central bank came to its
defense, selling US$150 million in the market, dealers said.
The New Taiwan dollar ended at NT32.771 to the U.S. currency,
from NT32.775 Tuesday.
The Singapore dollar's fall accelerated late in the day,
breaking below S$1.7800 support for the first time since August
1998, as several foreign banks bid up the U.S. currency, dealers
said.
With local banks not offering to sell U.S. dollars Wednesday,
the market interpreted this to mean that the Monetary Authority
of Singapore would tolerate a further weakening of the local
currency with the slump in regional foreign exchange markets,
dealers said.
"Since the MAS didn't make any attempt to prop up the
Singapore dollar, they pushed the U.S. dollar higher," said a
dealer.
The U.S. dollar was at S$1.7802, up from S$1.7722 late
Tuesday.
In the Thai currency market, the dollar was at 44.165 baht, up
from 43.965 baht late Tuesday.
On the Philippine Dealing System, the dollar closed higher at
48.633 pesos, compared with 48.44 pesos Tuesday.