SE Asian currencies mirror yen's fall
SE Asian currencies mirror yen's fall
SINGAPORE (Agencies): Southeast Asian currencies took a downward ride along with the yen on Thursday, as the U.S. dollar became a safe-haven currency ahead of a possible U.S. military strike on Iraq, traders said.
"An Iraqi attack would help the U.S. dollar and push the yen lower. That is one of the worries I have: if there is such a flight to quality, that will place huge downward pressure on regional currencies," said Fong Cheng Hong, a regional economist at Nomura in Singapore.
"As long as the yen doesn't depreciate in a drastic manner - moving, say, between 124 yen to 128 yen against the dollar - then there won't be too much pressure on the regional currencies," she said.
But if the U.S. dollar runs through 125 yen and higher, she said the Thai baht, Philippine peso and Singapore dollar would no doubt weaken in line with the falling yen.
The peso slipped back as the U.S. dollar inched higher and higher against the yen, moving to 123.09 yen late in the day from 121.41 yen Wednesday night. In a late trading, the U.S. dollar was trading at 40.81 pesos, up from 40.57 pesos at the same time Wednesday.
The U.S. dollar was also trading at 7,779 rupiah, slightly higher than 7,687 rupiah late Wednesday.
The U.S. dollar gained ground on the Singapore dollar, trading at S$1.6592 late in the day, well up from S$1.6495 Wednesday.
"We believe the U.S. dollar will be at S$1.65 by year-end," said Fong, adding that the recent rallies in the republic's currency and stock market are now over.
The Thai baht closed lower at 36.85 from 36.70 per U.S. dollar, the South Korean won fell to 1,317 from 1,315. Taiwan markets were closed for a holiday.
In London, the dollar rose against other major currencies on Thursday as investors bought the greenback amid rising chances of U.S. airstrikes against Iraq and a rise in oil prices.
The dollar was being traded at 122.85 yen from 122.01 yen on Wednesday, and at 1.6830 marks from 1.6794.
An economist at ABN Amro, Ian Gunner, said that the dollar was rising against the yen for two reasons.
The Swedish krona fell to 4.7668 against the mark from 4.7460 marks following a cut by the central bank of half-point rate in the lending and deposit rate.
The dollar was being traded at 1.6830 marks from 1.6794, 122.85 yen fro 122.01, 1.3870 Swiss francs from 1.3859 and 5.6433 French francs from 5.6327.
The mark was at 73.06 yen from 72.50, 0.8240 Swiss francs from 0.8249, 989.37 lira from 989.11, 3.3529 French francs from 3.3514 and 85.01 pesetas from 85.02.
The pound was at 1.6603 dollars from 1.6609, 2.7947 marks from 2.789), 204 yen from 202.43, 2.3031 Swiss francs from 2.3018 and 9.3707 French francs from 9.3554.