Rise of yen propels SE Asian monies higher
Rise of yen propels SE Asian monies higher
SINGAPORE (Dow Jones): Southeast Asian currencies continued their winning streak against the U.S. dollar in Asian trading Wednesday, after getting a tremendous boost from the strength of the yen.
Expectations of a strong supplementary economic-stimulus package in Japan, and the offshore unloading of the dollar against the yen, especially after the start of European trading Wednesday, pushed the U.S. currency convincingly below Y130.00.
Currency traders said the rise of 803.97 points, or 6.2 percent, in the Nikkei-225 stock average, to 13825.61, fueled demand for the yen, as investors expected the government to push through legislation to support ailing banks.
These moves prompted traders to sell the U.S. dollar against the South Korean won and the New Taiwan dollar. Southeast Asian currencies also benefited in the process, traders said.
The surging yen prompted exporters, importers and holders of foreign-currency deposits to continue to dump the U.S. currency.
In late trading Wednesday, the U.S. dollar ended lower against the New Taiwan dollar, at NT$33.346 - its lowest closing level since NT$33.230 on June 1 - from its close at NT$33.457 on Saturday, the previous trading day.
The South Korean won tracked the New Taiwan dollar, closing at 1,380 won to the U.S. dollar - stronger than Friday's close at 1,389.50 won. The South Korean currency market was closed Monday and Tuesday for a holiday.
A trader at Citibank in Seoul explained that, after the two- day holiday, the local market looked abroad to the yen's rise against the dollar and traded the won in sync with the Japanese currency.
"Interbank traders were bearish on the dollar here because of the outcome of global trading of the dollar against the yen," a Citibank trader said.
But, in the short term, the dollar is expected to be strongly supported at 1,375 won, because of some demand for the U.S. currency from companies with foreign debts due this week, traders said.
The won is expected to trade a bit higher Thursday if the dollar continues its slide against the yen. The Hong Kong dollar is also stronger against the U.S. dollar late Wednesday, unaffected by sharp falls in local interbank rates.
Dealers also said there was a growing belief that some institutions were unwinding positions. "We... heard that some U.S. houses are cutting their U.S. dollar positions," said a dealer with an Australian bank.
In late trading Wednesday, the Hong Kong dollar is at HK$7.7458 against the U.S. dollar, compared with HK$7.7481 late Monday. The market was closed for a public holiday Tuesday. The U.S. dollar has traded between HK$7.7458 and HK$7.7480 so far Wednesday.
In Southeast Asia, the Singapore dollar continued to register gains Wednesday, reaching an intraday high of S$1.6595, a level last seen in late July.
"The dollar-Sing (U.S. dollar versus the Singapore dollar) is basically tracking the dollar-yen (dollar versus the yen)," said a spot dealer at a Singapore bank. "It's not surprising to see the dollar-Sing weaken."
"We think the dollar-Sing is headed to S$1.6500 in the short term," said a currency analyst.
The U.S. dollar was trading around S$1.6722 late Wednesday, marginally down from S$1.6727 in early Asian trading, and down from S$1.6797 at Tuesday's close.
The Philippine peso also closed higher, on the added factor of slack corporate demand for the U.S. currency, traders said. Transactions were dominated by banks seeking to take quick profits from buying and selling dollars, said traders.
At the close, the dollar averaged 43.643 peso on the Philippine Dealing System, down 13.5 centavos from Tuesday's average at 43.778 peso. The dollar last traded at 43.680 peso. Volume totaled $145.5 million, up from $108.5 million Tuesday.
The Indonesian rupiah strengthened against the U.S dollar to levels unseen since early May, in active one-way trading Wednesday, taking advantage of investors' fears that Indonesia would implement some form of capital control.
After breaking the psychologically important level of 10,000 rupiah to the U.S. dollar shortly after trading started, the rupiah ended Asian trading at 9,600 to the dollar, stronger than its close Tuesday at 10,000.