SE Asian monies mixed, Japan holiday damps market activity
SE Asian monies mixed, Japan holiday damps market activity
SINGAPORE (Dow Jones): A public holiday in Japan left Southeast Asian currencies mixed against the U.S. dollar in quiet trading late Monday. The Indonesia rupiah remained flat, the Philippine peso and Thai baht managed to eke out small gains, and the Singapore dollar languished.
The U.S. dollar ended the day at 8,900 rupiah, unchanged from Friday. Traders bemoaned the fact that the market - anxious about continuing civil unrest - is highly illiquid, with only the odd corporate order finding its way to trading desks.
"Indonesia will need to see confirmed economic reform before investor flows become apparent," said an economist in Singapore.
He noted that the recent closure of 38 domestic banks, while welcomed, did little to buoy confidence. "Given that politics will overshadow everything until late November (to be then followed by not-insignificant Y2K problems), it will need to be a domestically driven turn-around in the economy if this year is to witness the bottom."
In North Asia, the Korean won and new Taiwan dollar fell as the U.S. dollar moved sideways between 117 yen and 118 yen during the Asian trading session.
Traders said the regional currencies were trading in a narrow range because of a lack of fresh news or market indicators, especially out of Japan. "The U.S. dollar is still seen as heavy (against the yen) in the short term," said a currency strategist at a European bank in Singapore. He added that any dollar-bearish sentiment won't translate into a sharply stronger yen, given the propensity of Japanese trusts and corporations to buy U.S. dollars just below 117 yen.
Higher
In late trading, the U.S. dollar was trading at 117.37 yen, up from 117.16 yen late Friday in New York, with a large dollar-buy order late in the session pushing the dollar higher.
"A thin market is buying on dips so this range trading between 116.50 and 119 yen is likely to be with us until fiscal year-end (March 31) in Japan," a trader at a U.S. investment bank in Singapore said.
Traders and currency strategists expect choppy movement in the U.S. dollar-yen to push regional currencies in similar fashion.
The U.S. dollar was trading at S$1.7277, up from $1.7232 late Friday. Traders said the market had already discounted the poor trade figures released over the weekend. Non-oil domestic imports, a key economic barometer, fell 7 percent in February from the year-earlier period. And January retail sales figures, announced late Friday, were down 13 percent on the year.
The U.S. dollar was also trading at 37.48 baht, down a touch from 37.4950 baht late Friday. Friday's auction of $6.1 billion of assets of failed finance companies didn't meet expectations, economists said, adding that it could have negative implications for the baht.
Peso
On the Philippine Dealing System, the U.S. dollar was trading at 38.715 pesos, down a touch from 38.75 pesos late Friday.
While most traders ascribe any peso movements to what happens in the U.S. dollar versus the yen, treasury bill rates continue to soften following the central bank's decision to lower overnight borrowing and lending rates by 12.5 basis points to 12 percent and 14 percent, respectively - the sixth rate cut this year. At Manila's government securities auction Monday, treasury- bill yields fell to 11.917 percent from 12.171 percent, pre-Asian economic crisis levels.
"That should weaken the peso over the next quarter unless continued strong capital flows from foreign direct investment keep the peso strong," said a non-deliverable forwards trader at a U.S. bank Manila.
In North Asia, the U.S. dollar was trading at 1,222.5 won, up from 1,220.80 won late Friday. The U.S. currency was also trading at 33.106 New Taiwan dollars, up a touch from NT$33.096.