SE Asia currencies follow yen lower
SE Asia currencies follow yen lower
SINGAPORE (Dow Jones): Southeast Asian currencies closed
sharply lower yesterday in a volatile day of trading in Asia.
Against the backdrop of the weak Japanese yen, which has
pressured regional currencies for the past several weeks,
exchange rates were hit by bad news from several quarters
throughout the day.
Equity markets were pummeled across Asia. The Hang Seng Index
in Hong Kong sank nearly 5 percent to 7979.37 points, a level it
hasn't seen since February 1995. Singapore's Straits Times Index
fell 4.4 percent to 1067.81 point, a eight-and-a-half year low.
In addition, a research report from Morgan Stanley predicted
that Southeast Asian currencies would sink lower against the U.S.
dollar by year-end.
Morgan Stanley economist Tim Condon forecast by year-end the
U.S. dollar would rise to 15,000 rupiah, 5.000 ringgit, 50 baht
and S$2.
A trader at a U.S. bank in Singapore said the Morgan Stanley
report did generate a lot of talk, but added that it contained no
revelations.
"If you've been in the know, you should already be long
dollars," he said. "This is just adding fuel to the fire."
The Singapore dollar market greeted the day to headlines that
international ratings agency Fitch IBCA believes that bank
deregulation and greater disclosure could harm the credit
standing of Singapore banks.
Intraday, the U.S. dollar rose to a four-month high of
S$1.7303 before retracing. At 1050 GMT, the U.S. dollar was
quoted at S$1.7285, much higher than S$1.7075 late in Asia
Tuesday.
"The market was looking to push S$1.72 anyway, and the Fitch
report gave the excuse," said a trader at a British bank in
Singapore.
The Indonesian rupiah, dragged out of the near-total
illiquidity it has maintained since late May by the sell-off in
other regional currencies, sank more than 10 percent to a four-
month low. At 1100 GMT, the U.S. dollar was quoted at Rp 13,150,
up from Rp 11,812.50 late Tuesday in Asia.
"General weakness in the region is moving the rupiah," said
one trader at a U.S. bank in Singapore. "There are still people
in Jakarta who need to buy dollars."
Andrew Dermot Fung, a treasury economist with Standard
Chartered Bank in Singapore, said most of the dollar-buying was
done in Jakarta by Indonesians.
"Very few people offshore are prepared to take the
counterparty risk," Fung said.
The U.S. dollar traded in a wide range against the Malaysian
ringgit throughout the day, as low as 3.935 ringgit and as high
as 4.030 ringgit.
"Even on days where you don't see big moves in dollar/yen, the
ringgit still trades in fairly big ranges," Fung said. "Today is
another day like that. There were pretty small volumes in the
interbank market."