Most Asian currencies rise on foreign investment inflow
Most Asian currencies rise on foreign investment inflow
SINGAPORE (Dow Jones): The won dropped steeply Friday after South Korea's finance minister announced a US$4.6 billion package of measures aimed at suppressing the currency's headlong rise against the U.S. dollar.
In Southeast Asia, the Indonesian rupiah, the Thai baht and the Philippine peso were all lifted by inflows of foreign investment funds. The Singapore dollar, however, fell back as traders worried about the possibility of intervention to hold down the local currency.
Throughout Asia, investment flows into local equity markets maintained their momentum Friday, adding to the upward pressure on regional currencies.
The U.S. dollar rocketed in response, rising to a high of 1,205.00 won from its earlier intraday low of 1,172.80 won.
Over the past few weeks the government has intervened in the foreign market almost on a daily basis by purchasing U.S. dollars through the Export-Import Bank, according to traders in Seoul.
At the close of Friday's domestic trading, the U.S. currency was at 1,188.00 won, up from 1,175.50 won at Thursday's close.
Elsewhere in the region, Southeast Asian currencies continued their bullish run, buoyed by heavy inflows of foreign investment funds into local stock markets.
Dealers even reported strong offshore interest in investing in the Indonesian rupiah, a currency which has been off most investor's radar screens for the last year.
However, with monetary easing elsewhere in Asia reducing the yield on other regional currencies to the slimmest of premiums over U.S. dollar interest rates, short-term rupiah yields of 30.0% are looking increasingly enticing, say traders.
Offshore buying interest drove the Indonesian currency to its highest level since the beginning of January in early trading, as the U.S. dollar was forced down to a low of Rp 8,200. The U.S. dollar recovered slightly later, however, on buying from onshore players.
Late in the Asian day, the U.S. dollar had edged back up to Rp 8,230, but was still well below Rp 8,382 late on Thursday.
The Thai baht also rose Friday, after bullish investor sentiment was further heightened by Moody's Investor Service's decision to raise the credit rating outlook on five of Thailand's major banks.
Late in Asian trading, the U.S. dollar was quoted at 37.2350 baht, down from 37.4325 baht late the previous day.
Sentiment towards Thailand is expected to remain strongly positive over the coming week, with dealers predicting the U.S. dollar will fall further towards 37.0000 baht after the announcement late Friday of a $987 million trade surplus for March, up from $668 million in February.
The Philippine peso also benefited from the regional trend, rising against the U.S. dollar, which dipped again below the 38.000 pesos to close at 37.989 pesos, down from 38.020 pesos Thursday.
The Singapore dollar, however, failed to join in the regional party despite a bullish stock market and news that industrial output rose by 6.5 percent in the first quarter.
The positive outlook was eclipsed by aggressive U.S. dollar buying from local banks, which lent weight to unconfirmed market suspicions that the Monetary Authority of Singapore was buying U.S. dollars at the S$1.6930 level.
By the end of interbank trading in Asia, the U.S. currency had been pushed up to S431.7030, up sharply from S$1.6962 late on Thursday.
In North Asia the New Taiwan dollar closed flat, with the U.S. dollar ending local trading at NT$32.688, compared with NT$32.689 the previous day.