SE Asian currencies close on weak note against dollar
SE Asian currencies close on weak note against dollar
SINGAPORE (Dow Jones): Southeast Asian currencies ended a choppy Asian trading session on Friday on a weak note against the U.S. dollar, after comments from Lawrence Summers, the U.S. deputy Treasury secretary, sent the dollar soaring against the Japanese currency.
Although the reaction of the regional currencies was muted compared with the yen's response, participants in the regional foreign-exchange markets did not hesitate to take Summers' remarks as their cue to buy U.S. dollars in anticipation of renewed currency weakness across Asia.
Summers, who was visiting Tokyo, was said by a senior official of Japan's ruling Liberal Democratic Party to have warned that Japan may not be doing enough to stimulate its ailing economy, and to have advocated further monetary measures.
"In the short term, the regional currencies are being treated as proxy yen trades," explained Desmond Supple, head of research at Barclay's Capital in Singapore.
The most pronounced reaction to the U.S. currency's surge came in North Asia, where, after opening lower, the U.S. dollar leapt by 0.7 percent against the South Korean won and by 0.5 percent against the New Taiwan dollar, in response to Summers' comments.
In North Asia, the U.S. dollar ended local trading in Seoul at 1,223 won, well above its early low for the day at 1,216 won, but fractionally below 1,224 won at the end of Thursday's session.
In Taipei, the U.S. currency closed at NT$33.055, up steeply from its intraday low of NT$32.918, but still a touch down from Thursday's closing level of NT$33.063.
On the Philippine Dealing System, the U.S. dollar followed a similar pattern in trading against the peso (PHP). After sliding to a low of 38.880 pesos in early trading, the U.S. currency rallied in response to its upward move against the yen, to close at 39.120 pesos. Thursday's closing level was 39.055 pesos.
The U.S. dollar's upsurge against the yen also dominated trading in other Southeast Asian currencies, eclipsing domestic influences on local foreign-exchange markets.
In Singapore, the 1999 budget statement, presented in Parliament Friday afternoon, went largely disregarded by the foreign-exchange market, after analysts forecast a fiscally prudent budget offering few surprises.
Although a squeeze in the forward market early in the day forced some weaker participants to abandon their long-U.S. dollar positions, pushing the U.S. currency to an intraday low of S$1.7200, the U.S. dollar later regained its initial losses.
By the end of Asian interbank trading, buying pressure had pushed the U.S. currency back up to S$1.7270, little changed from its level of S$1.7278 late Thursday.
The Indonesian parliament's approval of the country's 1999- 2000 budget Friday afternoon also had negligible impact on foreign-exchange trading.
Despite strong customer interest in buying U.S. dollars, the rupiah ended Asian dealing little changed on the day, as demand for the U.S. currency was met by sales from state banks in Jakarta, according to dealers.
Toward the end of Asian trading, the U.S. dollar was quoted at Rp 8,855, compared with Rp 8,839 the previous day.
Among the regional currencies, only the Thai baht showed any signs of independent movement Friday, as local exporters took advantage of the U.S. currency's recent gains to cash in their U.S. dollar holdings, generating heavy two-way flows in which the local currency was forced up slightly from Thursday's closing levels.
Toward the end of Asian trading, the U.S. dollar was quoted at 37.40 baht, down from 37.47 baht on Thursday.