Most Asian major currencies weaken
Most Asian major currencies weaken
HONG KONG (Dow Jones): A delayed cabinet reshuffle in
Indonesia and a reweighting of Thai securities in an important
investment index swirled around Asian foreign exchange desks
Friday, leaving most major currencies weaker.
The Thai baht breached an important support level at 41.00
baht to the dollar after news that Morgan Stanley Capital
International cut back the number of Thai stocks in its widely
tracked Emerging Markets Index.
Investors were also upset by reports that Indonesian President
Abdurrahman Wahid would delay the announcement of his new
streamlined cabinet to next Thursday, although the rupiah
recovered somewhat from its worst levels of the day.
The Philippine peso, South Korean won and Singapore dollar
also lost ground, mostly in sympathy.
A trader with a U.S. bank in Singapore said the MSCI
reweightings definitely sparked losses in the baht in the
morning. Some analysts said that while negative political
sentiment had been building up around the currency, the news
merely triggered the selling.
Investors aren't expecting any kind of political stability in
Thailand until the elections are out of the way, said JP Morgan
currency strategist Rebecca Patterson. She said the firm remains
negative on the baht and sentiment is unlikely to turn around
soon.
The U.S. dollar was trading around 40.975 baht, up from 40.76
baht Thursday, but down from key baht support of 41.00 baht.
In Jakarta, she said, the concern among investors, is that
Wahid's delays point to some sort of difficulty in gaining
agreement for his cabinet proposals. The risks against the rupiah
are fairly well balanced, she said, although she said the
currency is likely to weaken further.
Against the rupiah, the U.S. dollar is at Rp 8,335, where it
held through much during afternoon trade, said dealers in
Singapore. That's up from Rp 8,310 late Thursday and off levels
at around Rp 8,350 earlier in the session.
Patterson at JP Morgan urged keeping a close eye on the
Philippine peso, which now hovers close to 45.00 peso against the
U.S. dollar, putting it close to the Asian-crisis high at 45.50
peso hit in January 1998, she said.
The U.S. unit is now quoted at 44.965 peso, up from 44.93 peso
late Thursday.
She said six-month and one-year levels in the forward market
have come off in recent weeks, pointing to some stability in the
currency.
The Singapore dollar was also weaker late Friday, unnerved by
the weakness in its Southeast Asian counterparts, traders said.
The U.S. dollar was at S$1.7194, compared with S$1.7189 late
Thursday.
Against the South Korean won, the U.S. dollar was quoted at
1114.70 won, up slightly from 1114.60 won late Thursday. It was
also trading at NT$31.083, down a touch from NT$31.089 late the
day before.