Most Asian currencies weaker, Singapore dollar hardest hit
Most Asian currencies weaker, Singapore dollar hardest hit
SINGAPORE (Dow Jones): Most Asian currencies were weaker late Monday, with the Singapore dollar the hardest hit, even after having recovered from its 38-month lows following confirmation of Singapore Telecommunication Ltd.'s takeover of Australia's Cable & Wireless Optus.
The Japanese yen's weakness earlier in the day had cast a shadow on the Thai baht, the South Korean won and the Philippine peso.
In contrast, foreign equity fund inflows helped shore up the New Taiwan dollar, which ended firmer. Indonesian financial markets were closed for the Islamic New Year holiday.
The Singapore dollar had recovered from its 38-month low of S$1.7945 to the U.S. currency, but was still weaker, after Singapore's largest corporate acquisition was sealed. SingTel was declared the winner in a protracted battle to acquire a controlling stake for the Australian unit of London's Cable & Wireless PLC.
The deal, which valued Optus at up to A$17.2 billion, ended months of uncertainty which had stirred the Singapore dollar.
Around 0915 GMT, the U.S. currency was still higher at S$1.7880 compared with S$1.7837 late Friday.
Profit-taking, led by U.S. names, pulled the U.S. dollar down from its morning peak of S$1.7945, its highest level since January 1998, when Asia was mired in a financial crisis, dealers said.
"It's the typical buy the rumor, sell the fact strategy," said a dealer at a European bank.
While participants were jittery of an intervention by the Monetary Authority of Singapore when the local currency floundered to its 38-month lows, dealers said the de facto central bank stayed on the sidelines.
DBS Bank's market strategist, Philip Wee, said with "exceptional stress" on the Singapore dollar coming from the acquisition, there might be leeway for the U.S. dollar to rise to S$1.7950 - but not above that level, "unless there's disappointment in the yen and the euro." Last week, Wee had said that the MAS "will stay vigilant" around S$1.7900 to S$1.7920, unless the dollar breaks above Y125.
The Singapore dollar's weakness spilled over into the Thai currency market, which also succumbed to the yen's weakness earlier in the day, dealers said.
The dollar rose to 44.315 baht, from 44.195 baht late Friday.
The yen had slipped to as low as Y123.80 against the dollar early Monday, before rebounding on continued gains in Japanese stock prices, dealers said.
But "the risk is still toward yen weakness, which will weigh on Asian currency markets," said Thio Chin Loo, a currency strategist at BNP Paribas Group, adding that the outlook for U.S. stock markets remain shaky despite Friday's rebound. "I'd still stay core long dollars."
After yielding to the yen's early weakness, the New Taiwan dollar, and to a lesser extent the South Korean won, found solace from the Japanese currency's rebound and foreign equity fund inflows, dealers said.
Against the New Taiwan dollar, the U.S. currency ended lower at NT$32.699, compared with NT$32.771 Friday.
The South Korean currency closed at 1,310.5 won, weaker than Friday's close of 1,307.1 won, but off Monday's intraday low of 1,315.4 won.
On the Philippine Dealing System, the dollar finished at 49.185 pesos, up from 49.135 pesos Friday.