Rupiah climbs to nine-month high
Rupiah climbs to nine-month high
Alan Yonan Jr., Dow Jones, Singapore
The U.S. dollar continued to struggle against most Asian currencies Thursday as more evidence emerged that investors are shifting their money out of the U.S. and into Asia.
South Korean and Taiwan, whose stock markets have become favorites with foreign investors, saw their currencies climb to new 17- and 11-month highs, respectively.
The Thai baht, Indonesian rupiah and Singapore dollar climbed to their highest levels in 15 months, nine months and eight months, respectively. The Philippine peso also strengthened.
The latest monthly poll of Asian fund managers conducted by Dow Jones Newswires revealed increasing disenchantment with U.S. financial assets, due in large part to concerns about poor corporate earnings.
For the seventh straight month, fund managers said they preferred non-Japanese Asian stocks over all other global markets.
The survey squares with recent data issued by UBS Warburg that showed equity-related capital outflows from the U.S. surged in mid-May, while the Asia-Pacific region enjoyed its largest inflows since mid-February.
The news on capital flows isn't surprising, given the bright economic outlook for most of Asia, said Claudio Piron, currency strategist at Standard Chartered Bank in Singapore.
"A cyclical recovery is occurring in Asia and we're starting to see improvement in both exports and domestic activity. At the same time there is a portfolio diversification by global investors away from the U.S. and into Asian and European equities," Piron said.
Capital flows have also helped the yen and euro, both of which strengthened against the U.S. dollar Thursday.
The won rallied as exporters unloaded U.S. dollars late in the session despite fears that the government might intervene to cap the local currency's rise.
The U.S. dollar closed at 1,229.5 won, down from 1,234.3 won Wednesday. It was the won's strongest finish since Dec. 2000.
Seemingly opaque statements about foreign exchange policy kept market participants on their toes.
Finance Minister Jeon Yun-churl said Thursday the government wasn't considering direct intervention in the market, but at the same time he said it was concerned about the won's recent rise.
Bank of Korea Governor Park Seung said a day earlier that he wasn't worried about the won's rise.
The baht was carried higher by other regional currencies and foreign exchange transactions related to foreign inflows into the local stock market on Wednesday.
Late in Asian trading the U.S. dollar was quoted at 42.455 baht, down from 42.500 baht Wednesday. It was the baht's strongest performance since February 2001.
The New Taiwan dollar was bolstered by the yen's strength and large-scale U.S. dollar selling by exporters.
The U.S. dollar ended at NT$34.190, compared with NT$34.239 Wednesday. It was the local currency's best finish since June 2001.
Trading volume of US$1.92 billion nearly matched the record of $1.95 billion set on May 28, 2001.
Judging from the large turnover, "selling from exporters was panicky. To my knowledge, many exporters are still lining up to dump their U.S. dollars," said a dealer with a foreign bank.
The Singapore dollar edged higher in line with the stronger yen and other regional currencies.
Near the end of Asian trading the U.S. dollar was quoted at S$1.7890, down from S$1.7935 late Wednesday. The last time the Singapore dollar was stronger was in October 2001.
Trading was confined to a tight range amid renewed fears of possible U.S. dollar buying by agent banks of the Monetary Authority of Singapore, dealers added.
The Indonesian rupiah maintained its composure despite disappointing news with the canceled auction of the government's 51 percent stake in Bank Niaga.
The U.S. dollar closed at Rp 8,835, down slightly from its close Wednesday at Rp 8,850. It was the rupiah's strongest finish since last September.
The government said it canceled the Bank Niaga sale Wednesday because the bids were too low. However, the cancellation wasn't viewed as a major disruption to Indonesia's overall debt rescheduling program.
The peso was underpinned by the firm yen and other regional currencies.
The U.S. dollar closed at 49.915 pesos on the Philippine Dealing System, down from the previous session's close of 50.07 pesos.
Traders said the session was largely uneventful, with volume thinning to $113.25 million from $204 million a day earlier.