SE Asian currencies uninspired by RI move
SE Asian currencies uninspired by RI move
SINGAPORE (Reuter): Southeast Asian currencies remained weak yesterday as Indonesia's move to curb speculative dollar demand by curbing forward foreign exchange transactions provided only a brief boost to the rupiah.
It backed off an early high of 2,850 to the dollar as tumbling swap rates triggered liquidation of long forward positions, dealers said.
Bank Indonesia said on Sunday it was limiting forward selling against the rupiah by domestic banks to foreign customers to a maximum amount of $5 million per customer.
Analysts saw the central bank move, similar to Malaysia's recently imposed controls and Singapore's long-standing ones, as an effective minimum step to counter short-term speculation.
A Singapore dealer said the rupiah's brief rise was due to underlying worries of a liquidity squeeze. "But when liquidity turned out to be okay and offshore was well prepared to face the new rules, spot dollars trended to reverse direction and might strengthen further," the dealer said.
The rupiah was near its day lows at 2,950/60 at 0945 GMT after opening at 2,860/90.
The Malaysian ringgit followed the rupiah down, but dealers said trade was subdued with Kuala Lumpur markets closed for a national holiday. The ringgit was quoted at 2.9200/50 to the dollar after firming to 2.9050 against 2.9040/70 late on Friday.
Dealers said the outlook for the ringgit remained bleak and it was expected to test the 3.00 to the dollar level soon, though its recent low of 2.9670 would provide interim support.
"There are rumors the central bank will not allow it to go above 3.00, so the dollar's being capped above 2.9500 for now," said the head of Asian currencies at a European bank.
The Singapore dollar backed off a high of 1.5050 in tandem with the drop in other regional currencies.
But dealers said its fall would be restricted by expectations the Brunei Investment Agency (BIA) might sell U.S. dollars to support the Singapore dollar again.
"There's talk a Southeast Asian country is looking to sell dollar/Sing at 1.53 to protect its own currency because it's very closely linked to ours," the European bank dealer said.
The Brunei dollar is pegged to the Singapore dollar under a currency interchangeability agreement and on Friday, the Singapore dollar bounced back sharply from a low of 1.5375 on talk the BIA was spending large amounts of U.S. dollars on buying the Singapore dollar and the ringgit.
"Friday's action was just to show token support. I don't think they can do much, but their presence certainly helped because they're one of the richest countries in the world," the dealer said.
The baht hit a new low onshore as worries about Thailand's political direction and turmoil in regional markets prompted dollar demand from companies seeking to hedge their positions.
It was quoted at 34.55/65 after falling as low as 34.60 against 34.18/34.28 late on Friday. It was at 34.30/50 offshore against 34.05/34.15.
The Philippine peso gave up early gains triggered by a surge in domestic interest rates after the central bank's new liquidity reserves came into effect.
The peso was at 30.37/38 against an opening 30.25.
Philippine Finance Secretary Roberto de Ocampo said rising domestic interest rates would eventually have to fall to prevent a contraction in the economy.
The Taiwan dollar finished firmer after the central bank's renewed promise to defend it from the malaise afflicting the rest of the region's currencies.
It ended at T$28.618, off an intra-day high of T$28.590, against Saturday's T$28.630 close, but dealers said it might have made too speedy a recovery and the central bank could use the opportunity to buy back the U.S. dollar after dumping it heavily to defend the local currency in recent weeks.
The South Korean won finished lower in line with the dollar's rise against the yen, but dealers said its fall was capped by fears of central bank intervention.