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.