Most Asian monies hit multi-week highs
Most Asian monies hit multi-week highs
Nirmala Menon, Dow Jones, Singapore
Most Asian currencies hit multi-week highs as the U.S. dollar
fell to a fresh one-month trough against the yen Tuesday, ahead
of a widely expected rate cut by the U.S. Federal Reserve.
The Singapore dollar, Thai baht, South Korean won and New
Taiwan dollar all rose to levels not seen since mid-to-late
September.
The Philippine peso chalked up gains for the third consecutive
session, while the Indonesian rupiah was steady.
The dollar tumbled roughly half a yen early in Asia amid
growing skepticism that a rate but by the Fed, which meets
Wednesday, would give a much needed lift to the U.S. economy,
especially with uncertainties such as the possibility of a war
with Iraq still hanging in the air. Market players are betting
the Fed will lower rates by 25 basis points.
Meantime, market watchers were divided over the likely impact
on the dollar of another major U.S. event - mid-term elections
set for later Tuesday. However, analysts said the impact of the
elections would be small regardless of the outcome.
"The year-end FX (foreign exchange) strategy is starting to
look like a game of musical chairs that entails shorting the
currency of the country that is going to ease next," after the
Bank of Japan recently eased monetary policy, wrote Singapore's
DBS Bank market strategist Philip Wee in a note Tuesday.
BNP Paribas said the dollar's softness at a time when share
prices are recovering underscores the firm's views on the drivers
of regional units this year.
Asian currencies "tend to do well in an environment of risk
appetites, where the stock market is a proxy. This comes about as
investors take a more sanguine view of financial risks and put
their money to work in markets outside of the U.S.," BNP Paribas
said.
"The presumption therefore is of a reversal of capital flight
out of Asian countries, including Singapore, which benefits local
currencies," it added.
The U.S. dollar ended at 1,217.0 won - its weakest close since
Sept. 19 - and down from 1,219.0 won Monday. Intraday, it traded
between 1,214.0 won and 1,219.5 won.
The won was buoyed by the stronger yen, and also dollar
selling by offshore players, traders said.
The New Taiwan dollar also took heart from the yen's strength,
with the U.S. unit closing at NT$34.625, down from Monday's
NT$34.698, and its lowest since Sept. 19. The U.S. dollar traded
between NT$34.600 and NT$34.700.
Against the Singapore dollar, the U.S. currency was quoted
around S$1.7563 late in Asia, down from S$1.7672 late Friday.
Financial markets in Singapore were closed for a holiday Monday.
In Thailand, the dollar closed at 43.19 baht, down from 43.24
baht Monday.
Elsewhere, the dollar ended at 52.835 pesos on the Philippine
Dealing System, down from 53.010 pesos at the previous close,
after trading between 52.800 pesos and 52.985 pesos.
The Indonesian rupiah was flat against the dollar, which
closed at Rp 9,215, just off its intraday low of Rp 9,210.
Jakarta suffered another shock Tuesday with the evacuation of
the United Nations building after an anonymous bomb threat.
Police found no bomb, but the capital remains on high alert after
a bomb killed more than 180 mainly Western tourists on the island
of Bali last month.
Market players continue to keep to the sidelines as they wait
and see if the government could crack down on terrorism.