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.