Most Asian currencies weaken due to softer yen's pressure
Most Asian currencies weaken due to softer yen's pressure
SINGAPORE (Dow Jones): Asian currencies weakened across the
board Wednesday, pressured by a softer yen, falling stock markets
and a host of local factors.
The Indonesian rupiah was lower late Wednesday, pressured by
concerns about the release of International Monetary Fund loans,
but losses were modest as state banks came to its defense,
dealers said.
Around 0840 GMT (3:40 a.m. EST), the dollar was quoted at Rp
9,625, up from Rp 9,615 late Tuesday.
Keen dollar buying by local banks - led by Bank Central Asia -
probably on behalf of corporate customers weighed on the rupiah,
and in turn fueled dollar short-covering around Rp 9,620, dealers
said.
This provoked dollar-selling by state banks, which kept a rein
on the U.S. currency's ascent, dealers said.
Demand for dollars, however, remained strong with keen
corporate appetite for the currency and amid worries that the
International Monetary Fund might withhold its loans to
Indonesia, dealers said.
"The bids (for dollars) keep on coming," said a European bank
dealer. "There are fears the IMF might delay again its loan
disbursements to Indonesia - that's not good news for the
rupiah."
In South Korea and Taiwan, where the tech-heavy bourses often
move in tandem with the Nasdaq Composite Index, both the won and
New Taiwan dollar retreated after hitting their highest levels
for the year a day earlier.
Southeast Asian currencies also slumped, with the Philippine
peso hitting an eight-day low after President Gloria Macapagal-
Arroyo's hinted that a weaker currency would boost exports.
In Seoul, the won eased against the dollar after Korea
Composite Stock Price Index fell 2.3 percent on the heels of a
4.4 percent drop in the Nasdaq overnight. The won also was
pressured by the dollar's gains against the yen, dealers said.
The won often mirrors movements in the yen because the two
countries compete in many of the same export markets.
The dollar finished Asian trading hours at 1,238 won, up from
1,235.8 won Tuesday.
Despite Wednesday's decline, the won is still up 2.2 percent
this year, underpinned by a strong stock market and rumors that
international ratings agencies may upgrade South Korea's debt.
The New Taiwan dollar edged lower after foreign investors took
a breather from their recent buying binge in the local stock
market.
The U.S. dollar closed at NT$32.287, up from the previous
close of NT$32.271. Foreign institutional investors sold a net
NT$1.1 billion in stocks, reversing a recent trend that has
boosted demand for the local currency.
Over the longer term the New Taiwan dollar could suffer from a
political battle over the construction of the country's fourth
nuclear plant, Bank of America said in a note to clients.
If the ruling party proceeds with a referendum on the
contentious issue of whether to halt construction of the plant,
"it could deeply divide the society and create more political
uncertainty," Bank of America said. "Such a scenario would be bad
for the New Taiwan dollar."
The Philippine peso, which has enjoyed strong support since
resolution of the country's leadership crisis in mid-January,
slumped after Arroyo's comments.
Arroyo told business leaders the government will allow free
market forces to determine the peso exchange rate.
The dollar closed at 48.120 pesos on the Philippine Dealing
System, up from 47.630 pesos a day earlier.
The Singapore dollar weakened amid a flurry of news that
Singapore companies were looking for overseas acquisitions.
Singapore's DBS Group Holdings Ltd.is reportedly close to
acquiring Korea Exchange Bank's credit card unit.
Late in Asian trading the dollar was quoted at S$1.7437, up
from S$1.7387 late Tuesday. The trading range was fairly narrow
ahead of an expected statement on exchange rate policy Thursday
by the Monetary Authority of Singapore.
In Thailand, the baht slipped against the dollar amid market
talk that the central bank may cut short-term rates to try to
spur economic growth.
Late in Asia the dollar was quoted at 42.930 baht, up from
42.710 baht late Tuesday.