Regional monies mixed, mart edgy over ringgit
Regional monies mixed, mart edgy over ringgit
SINGAPORE (Dow Jones): Southeast Asian currencies are mostly mixed against the U.S. dollar in late Asian trading Wednesday with broader trading interest in these currencies grinding to a halt, said market players.
With low liquidity in the rupiah and none in the ringgit, movements in the Singapore dollar and the Philippine peso were the highlights of Asian dealings in a rather choppy trading session, said market players.
The biggest concern of interbank players in the regionals is how to handle their exposure to the ringgit, said market players. Tuesday, Malaysian Prime Minister Mohamad Mahathir said the country would be reverting to a fixed exchange rate to insulate the economy.
On Wednesday, Malaysia's central bank, Bank Negara, fixed the U.S. dollar-ringgit exchange rate at 3.80. The move resulted in a complete standstill in ringgit trading in offshore and onshore markets.
Developments in Malaysia and the spillover effect on Singapore grabbed the spotlight away from Hong Kong, where the spot and the forward instruments have been under pressure.
"The draconian capital control measure taking hold in Malaysia has certainly shifted the regional focus away from Hong Kong, and the Hong Kong Monetary Authority can probably thank Bank Negara Malaysia for providing the unexpected reprieve," said a treasury economist at MMS International.
"Traders are trying to clear the confusion surrounding the ringgit. There are a lot of details that need to be worked out. We understand that some banks have forward exposures in the ringgit for up to five years," said the regional currencies head at a Japanese bank here.
Everybody has stopped trading the ringgit. Tackling the (ringgit) exposure is going to be a tedious process...if it can be solved at all," said Daniel Lian, head of Asian Markets Research at ANZ Investment Bank in Singapore.
"On the whole, there's very little trading interest in Southeast Asia," he added.
But the U.S. dollar posted a sharp rise against the Singapore dollar in Wednesday dealings, rising 2.4 percent to an intraday high of S$1.7485. The view that the Singapore dollar needs to weaken to enhance the country's competitiveness in the global market spurred market players to sell the local currency, said the regional currencies head.
The rise in the U.S. dollar versus the Singapore dollar was also fueled by the squeezing of interbank players' short positions that were in place in early Wednesday dealings, said a trader at a Singapore bank.
In late trading, the U.S. dollar is trading at S$1.7470, up from S$1.7259 late Tuesday.
The dollar is also higher against the baht after market players unwound their positions in the Thai currency following developments in Malaysia.
"There was a lot of giving interests in the baht and baht swaps today. There was some strong selling...basically, the yield curve came off sharply," said a regional currencies trader at a major Thai bank here.
The dollar is quoted at 40.9000 baht, up from 40.88 in late Tuesday trading.
Bucking the trend in Southeast Asia was the Philippine peso, which closed higher against the U.S. dollar in a choppy market that took its early cue from gains in the yen.
At the close, the dollar averaged 43.067 peso on the Philippine Dealing System, down from Tuesday's 43.432. The dollar fell to an intraday low of 42.820 and was last traded at 43.310.
Dealers noted that around midday, early gains in the peso were eroded somewhat after the yen weakened very marginally from earlier levels Wednesday to Y137.90 against the dollar. "This caused banks to stay long on dollars," a trader with a foreign bank said.
The Hong Kong dollar is weaker late Wednesday, as interest rates gradually eased throughout the day and speculative activity was minimal.
Forward premiums on the currency fell as players closed positions and investors slowed their hedging on Hong Kong dollar exposure on the rebound in share prices Wednesday, traders said.
"It's commercial buying and selling so far" and there's no apparent evidence that speculators are active in the market Wednesday, said a dealer with a European bank. "The TT (spot currency) market is very quiet," he added.
In late trading, the Hong Kong dollar is quoted at HK$7.7495 against the U.S. dollar, compared with HK$7.7465 late Tuesday.
In South Korea, the won settled higher Wednesday as the yen remained relatively firm against the U.S. dollar in late Asian trade, traders said. The dollar ended at 1,340 won, down from Tuesday's close of 1,355 won, they said.