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.