SE Asian currencies gain on yen's surge
SE Asian currencies gain on yen's surge
SINGAPORE (Dow Jones): Southeast Asian currencies, with the
notable exception of Indonesia's rupiah, rose yesterday as the
U.S. dollar hit a wall against the Japanese yen in early Asian
trading.
The dollar capped a weeks-long surge against the yen at 146.70
as the market opened in Tokyo, but massive dollar sales,
reputedly by U.S. funds, sent the dollar plunging nearly four
yen, or more than 2.6 percent, to 142.80 in a span of less than
three hours.
Later in Asian hours, the dollar traded back up nearly to
146.00 yen before profit-taking in Europe reversed course on the
exchange rate once again.
At 1020 GMT (6:20 a.m. EDT), the dollar was quoted at 144.83
yen, down about 1 percent from 146.28 yen late Monday in Asia.
The Indonesian rupiah failed to benefit from the yen's show of
backbone against the dollar because of continuing doubts over
political stability in Indonesia, according to traders in
Singapore.
Riots have been reported in several towns in Indonesia over
the past few days, although the capital remains calm.
"Demand onshore for dollars is very large," said one trader at
a Dutch bank in Singapore. "There are these sporadic protests,
and people want to hedge in case large protests resume."
"In addition, there is no commercial reason to sell dollars in
Jakarta. All of the corporates are dollar buyers," he said.
Other Southeast Asian currencies managed to post gains against
the U.S. dollar on the back of yen strength, but such gains may
proved to be short-lived.
"The yen is a few weeks old as a factor pressuring local
currencies," said Friedrich Wu, head of economic research for the
Development Bank of Singapore. "Before that it was Indonesia.
Even without the yen, currency traders would look to Indonesia
for cues."
Violent prodemocracy protests in May that forced Indonesian
President Soeharto from power also savaged regional currencies.
"We are facing a region-wide or pan-Asia financial crisis," Wu
said. "It is now afflicting stronger economies, such as Taiwan,
Singapore, Hong Kong and China."
Paul Alapat, senior economist with Indosuez WI Carr in
Singapore, said that the weak yen continues to cut the price of
Japan exports.
"That hits Korean exports, and Korea competes with Taiwan and
Singapore," Alapat said. "It spreads down the line. Singapore
overlaps with Malaysia."
Wu said stronger economies are being dragged down by regional
contagion.
"Individual economies have their individual problems, but in
terms of domestic concerns, Singapore and Taiwan had the least
problems," he said.
At 1125 GMT (7:25 a.m. EDT), the U.S. dollar was quoted at
S$1.7425, down from S$1.7513 late Monday in Asia. The U.S. dollar
ended trading in Taipei at NT$34.819, down from Monday's close of
NT$34.872.