Most Asian monies down, dollar short covering ends
Most Asian monies down, dollar short covering ends
Alan Yonan Jr., Dow Jones, Singapore
The dollar weakened against most Asian currencies Monday,
snapping a two-session rally as risk aversion returned to the
forefront of investors' minds.
The Indonesian rupiah was the only regional currency unable to
advance against the dollar.
The U.S. currency's recent gains had stemmed mostly from
position short covering, which took the spotlight off of a host
of dollar-negative factors.
Much of the risk aversion toward the dollar stems from a
perception that a U.S.-led invasion of Iraq is becoming
increasingly unavoidable, analysts said.
Also weighing on the dollar are tensions on the Korean
Peninsula, and concerns about the strength of the U.S. economic
recovery.
"It seems clear that last week's dollar rally was little more
than a washout of short positions, and that the structural dollar
downtrend remains intact," UBS Warburg said in a research note.
Continued U.S. troop mobilization, more hawkish rhetoric from
President George W. Bush toward Iraq, and a new suicide bomb
attack in Israel are all keeping the Middle East issue fresh in
investor's minds, UBS Warburg said.
The dollar could face additional pressure if corporate
earnings are disappointing when the reporting season gets into
full swing in the second half of January.
However, one possible bright spot for the dollar this week
could come in the form of a fiscal stimulus program President
George W. Bush is expected to unveil Tuesday in an attempt to
reinvigorate the lackluster U.S. economy.
The South Korean won didn't rely solely on negative dollar
news to boost its fortunes. The currency was underpinned by the
second straight day of capital inflows to the local stock market.
The dollar closed at 1,188.9 won, down from 1,196.9 won, late
Friday.
The New Taiwan dollar powered its way to a seven-week high
against its U.S. counterpart.
The U.S. dollar ended at NT$34.645, compared with NT$34.806 at
Friday's close.
In addition to the general anti-U.S. dollar mood dominating
trading, local exporters were selling the U.S. currency and
stocking up on local dollars to ensure they had enough cash to
pay staff bonuses ahead of the Chinese Lunar New Year, traders
said.
The Singapore dollar tracked other regional currencies higher,
but its gains were limited by concerns about the health of the
local economy.
Late in Asia the dollar was quoted at S$1.7380, down from
S$1.7443 late Friday in Asia.
On the other hand, fundamental economic concerns have also
kept the local dollar from chalking up any significant gains
since the start of the new year.
The Singapore economy is estimated to have expanded 2.2
percent in 2002, but economic growth is expected to be bumpy at
least until the second half of 2003.
The Thai baht also moved in tandem with its regional peers
with a dearth of domestic developments to influence trading.
Toward the end of Asian trading the dollar was quoted at
42.835 baht, down from 43.030 baht late Friday.
Dollar demand from Indonesian corporations prevented the
rupiah from following the lead of its regional counterparts.
Near the end of Asian trading the dollar was quoted at Rp
8,935, up from Rp 8,915 late Friday.
There were some concerns in financial markets that street
protests over recent hikes in fuel prices and utility tariffs
could get out of hand.
Hundreds of demonstrators took to the streets in several major
Indonesian cities to protest the increases. However, the protests
remained peaceful.