SE Asian currencies ease back on flat stock prices
SE Asian currencies ease back on flat stock prices
SINGAPORE (Dow Jones): Southeast Asian currencies eased back against the U.S. dollar on Wednesday as a fall in the yen and profit-taking on local equities dampened sentiment towards regional foreign exchange markets.
The sole exception to the general trend was the South Korean won, which ended fractionally higher against the U.S. dollar, despite dwindling fund inflows into the local stock market.
In contrast to the excitement of last week's regional currency rally, which carried over into the early part of this week, activity was subdued across Asia, traders complained.
"The sort of markets we're seeing these days are either full- on, or there's nothing at all. This was one of the nothing at all days," commented Andrew Fung, a treasury economist at Standard Chartered Bank in Singapore.
Among the few regional currencies to show a sizable move was the Thai baht, which dipped steeply against the U.S. dollar in early trading.
Although foreign investor sentiment towards Thailand remains positive, Thai players were less optimistic, bidding the U.S. currency up above the 37.50 baht for the first time this week.
Towards the end of interbank trading hours in Asia, the U.S. dollar had been pushed up to 37.5100 baht, from 37.3950 baht late the previous day.
Should the Bangkok stock market continue falling, following a 0.9 percent dip on Wednesday and a 1.5 percent drop the previous day, the U.S. currency is likely to retest the 37.5500 level in the immediate future, said the head of foreign exchange trading at a Thai bank.
Sliding stock prices also whittled away at the Philippine peso's recent gains, as the Manila stock market slipped by nearly 2 percent on Wednesday.
At the close of local trading, the U.S. dollar was at 38.070 pesos, well down from its earlier intraday high of 38.180 pesos, but up a fraction from 38.050 pesos at Tuesday's close.
The Singapore dollar also ended a fraction lower, despite a modest upturn in local stocks after Tuesday's fall.
For the time being the U.S. currency is trapped in an extremely tight S$1.7100 to S$1.7150 range, supported by fears of potential local monetary authority buying below S$1.7100, and capped by investment banks sales towards S$1.7150.
Should the U.S. dollar strengthen further against the yen, however, convincingly clearing the Y119.00 level, then a test of S$1.7150 is likely, warn dealers.
Late Wednesday in Asia the U.S. dollar was at S$1.7112, up marginally from S$1.7110 at the same time the previous day.
Against the Indonesian rupiah, the U.S. dollar ended Asian trading at Rp 8,665, little changed from Rp 8,860 the day before.
After climbing earlier in the week, Wednesday saw the new Taiwan dollar give back some ground on abated trading volumes. A weaker yen and softer stock prices contributed to the local currency's fall, as the U.S. climbed to close at NT$32.775, up from NT$32.742 on Tuesday.
The South Korean won, however, succeeded in ending a touch higher despite a stock market sell off. The local currency struggled to maintain its bullish tone, however, following reports that a senior central bank official had talked down the likelihood of further interest rate cuts, saying that the rapid decline in rates this year had distorted both the equity and foreign exchange market.
Recent interest rate reductions have sparked a 36 percent rally in the local stock market over the year to date, sucking in foreign investment funds, which have helped lift the won by around 5 percent from its early March low against the U.S. dollar.
At Wednesday's close the U.S. dollar was at 1,188.20 won, down slightly from 1,190.00 won the previous day.