Most SE Asian currencies up against the dollar
Most SE Asian currencies up against the dollar
SINGAPORE (Dow Jones): Southeast Asian currencies were
generally higher against the U.S. dollar in late trading Monday
as sentiment for the U.S. currency wanes, traders said.
The apparent end of U.S. air attacks on Iraq, the weekend
decision to impeach U.S. President Bill Clinton and continual
reports of lay-offs and possible poor earnings by U.S
corporations has prompted dollar selling, they said.
Economists are looking with interest to see how the Dow Jones
Industrial Average performs today and Tuesday, ahead of the U.S.
Federal Reserve policy meeting Dec. 22.
"Conspiracy theories abound that the Fed and the (European
Central Bank) will cut rates on the same day. If the Dow tumbles
and credit spreads widen, then the probability of a Fed rate cut
increases," said a treasury economist at Standard Chartered Bank
in Singapore.
The U.S. dollar was flat against the Singapore dollar, traders
said, even after the republic announced the sharpest decline in
non-oil exports in 19 months. A fall in electronics exports and
weak demand from abroad caused a 6.5 percent drop in exports in
November. Economists said the drop means 1998 gross domestic
product could fall at the lower end of the government's 0.5
percent to 1.5 percent growth estimate.
In a late trading, the U.S dollar continued to move sideways
against the Singapore dollar, trading at S$1.6493, almost
unchanged from S$1.6485 late Friday.
The U.S. dollar was also trading at 36.130 baht, down from
36.45 baht late Friday.
The U.S. dollar continues to weaken, despite last week's
poorly received Financial Restructuring Agency auction,
Economists said the auction - described as a temporary setback -
doesn't represent a fatal blow to the country's economy, given
that further inflows can be expected on the repackaging and
repeat auction for the unsold tranches in three months. About 41
percent of the $11 billion worth of seized assets from 56 defunct
finance companies was sold.
"The reaction by the financial markets was predictable but
clearly overdone," said an economist at a U.K. bank. "While the
low level of the bids suggest that investors require deeper-than-
expected discounts, this should not be seen as completely
negative. The irony is that lower asset prices may make
investment in Thailand that much more attractive. Combined with
signs that banks in Thailand are implementing recapitalization
plans, the medium-term prospects for banking recapitalization are
looking positive."
Thai Farmers Bank will start to issue new shares this week, he
said, while Bangkok Bank is expected to soon follow suit.
The U.S. dollar was also trading at 7,675 rupiah, down from
7,750 rupiah.
Traders said the International Monetary Fund's comments last
week that interest rate cuts should be forthcoming has buoyed the
rupiah in the spot and forward markets.
On the Philippine Dealing System, the U.S. dollar was trading
at 39.00 pesos, down from 39.21 pesos late Friday. Traders said
capital inflows, coupled with year-end repatriation of funds from
overseas workers, has pushed the peso higher.
The government announced today that agricultural production
will contract by as much as 3.7 percent in the fourth quarter of
1998 as unmilled rice production is down. Agricultural production
is a key component in the country's economic engine, making up 20
percent of the gross national product. Analysts now estimate that
GNP growth will be anywhere from flat to 0.4 percent in the
fourth quarter.
In North Asia, the U.S. dollar was trading at 32.247 new
Taiwan dollars, down a touch from NT$32.274 late Friday. In South
Korea, the U.S. dollar was trading at 1,195.5 won, well down from
1,207.9 Friday.