SE Asian currencies down against dollar
SE Asian currencies down against dollar
SINGAPORE (Dow Jones): Southeast Asian currencies fell afresh yesterday to finish the day, and the week, lower against the U.S. dollar.
And as sentiment towards the yen continues to dictate the direction of trading in the regional currencies, many market participants are predicting further depreciation in the coming week, after the results of Sunday's elections to the upper house of the Japanese Parliament are announced.
"Most people have squared up by now," said a regional currency trader at a U.S. bank in Singapore, speaking late on Friday afternoon.
"In the medium term it looks like the yen will be weaker and that means that the regional currencies will weaken too. But it would be silly to stick your neck out and take positions until the Japanese election is out of the way," he said.
Anything other than a resounding victory for the ruling Liberal Democratic Party will mean a sell-off in Asian currencies when trading resumes on Monday, as market players reestablish their long U.S. dollar positions, say dealers.
"The market is very sentiment-driven at the moment," said Koh Foong Yin, head of research at Overseas Union Bank in Singapore.
Although Koh dismisses as small the fundamental economic impact of many of the developments which have swayed regional currencies in recent sessions, she acknowledges their power to depress sentiment in the short term.
"If the yen weakens and the current tension between Malaysia and Singapore gets any worse then we are looking at the ringgit going to 5.00 (ringgit to the U.S. dollar) over the longer term," said the chief dealer at one U.S. bank in Singapore. In that case, with the Malaysian currency projected to fall to $S0.38, the Singapore dollar will go to S$1.90 to the U.S. currency, he said.
Late in Asia on Friday, the U.S. dollar was quoted at 4.28 ringgit, up from 4.2250 ringgit late the previous day, and 4.1450 ringgit a week before.
Against the Singapore dollar the U.S. dollar was at S$1.7306, up sharply from S$1.7151 late on Thursday and S$1.6966 the previous Friday.
Even if the yen does resume its slide against the U.S. dollar, not all regional currencies will be equally affected, however.
Baht
"The dollar will struggle to go above 42 baht," said the U.S. bank trader. With Thailand's current account surplus now running at around $700 million per month, the influx of U.S. dollars into the Bangkok market will support the baht, near its current level, he said.
Towards the end of Asian trading on Friday the U.S. dollar was quoted at 41.7550 baht, up from 41.4350 baht the day before and above 41.4550 a week earlier.
The baht is not the only Asian regional currency to find support from a ballooning current account surplus.
At the close of trading on Friday the U.S. dollar was quoted at 1,315 won, up a touch from 1,307 won at Thursday's close, but well below 1,356.50 won late the previous Friday.
Although the Korean currency's rally may continue over the short term, there are few won bulls to be found in the foreign exchange market, as most participants argue that Korea's weak economic fundamentals will reassert their baleful influence soon.
Among other Asian regional currencies, the rupiah rose a touch yesterday, although it still ended the week lower against the U.S. dollar. The Philippine peso and the new Taiwan dollar were both sold off to finish the day and the week down.
Late on Friday the U.S. currency was quoted at 15,025 rupiah, down from 15,200 the day before, but well above 14,375 a week earlier.
Against the Philippine peso the U.S. currency ended at 42.01 pesos in the domestic market, up from 41.54 peso at Thursday's close and 41.37 peso a week before.
Despite central bank intervention late in day, the U.S. dollar also ended up against the Taiwanese currency, finishing at NT$34.402, up from NT$34.388 the previous day and NT34.382 a week earlier.