SE Asian monies sustain upward trend to U.S. dollar
SE Asian monies sustain upward trend to U.S. dollar
SINGAPORE (Dow Jones): Southeast Asian currencies sustained
their recent upward trend against the U.S. dollar through Asian
trading hours on Tuesday, as position unwinding and expectations
of a cut in U.S. interest rates further undermined pro-dollar
sentiment.
The Singapore dollar gained the most ground, with the U.S.
currency dropping steeply at one point, to fall below S$1.6800
for the first time in over two months.
Elsewhere in the region, the baht, the Philippine peso and the
rupiah all edged higher, while, in North Asia, the won and the
New Taiwan dollar also strengthened.
The market's near-universal belief that the U.S. Federal Open
Market Committee would cut U.S. interest rates at its meeting
late Tuesday was broadly cited as contributing to Asian
currencies' new-found strength.
But a more influential factor, according to some traders, was
the ongoing liquidation of long-U.S. dollar positions.
Selling of U.S. dollars by U.S. investment banks in Hong Kong,
on behalf of funds seeking to cut back their positions against
the Singapore dollar, proved instrumental in forcing the
Singapore currency up through key resistance levels, said
traders.
Late in the Asian day, the U.S. dollar was quoted at S$1.6770,
down steeply from S$1.6959 late Monday.
Traders and analysts were divided over how long the Singapore
dollar can continue its rally, however. While some argued that
the local currency would slip back in the fourth quarter of the
year, others maintained that the Singapore dollar would remain
relatively stable for the rest of the year.
"I'm still looking for the U.S. dollar to recover, as the
hedge-fund liquidation process abates into the new quarter," said
Ron Leven, foreign-exchange strategist at J.P. Morgan in
Singapore.
As traders attempt to boost their battered returns ahead of
the year's end, said Leven, they will return to the tried and
trusted trades that have consistently made them money - short yen
and short Singapore dollar - forcing the Singapore currency lower
once again.
Other market participants are not so sure.
Among other regional currencies, the baht continued to edge
higher, with the U.S. dollar slipping to end Asian trading at
39.0250 baht, down from 39.1200 baht Monday.
Following the baht's impressive strengthening over recent
sessions, some analysts question whether the Bank of Thailand
will tolerate further appreciation.
The Philippine peso also ended Tuesday higher, following the
Philippine central bank's announcement that it would raise the
statutory reserve requirement of commercial banks by two
percentage points, to 10 percent, from Friday.
At the close of trading on the Philippine Dealing System, the
U.S. dollar was quoted at 43.84 pesos, down from 43.94 at the
previous close.
The rupiah also ended the day higher, as local-market
participants continued to anticipate inflows of pledged
assistance funds. Toward the end of Asian dealing, the U.S.
dollar was quoted at 10,613 rupiah, down from 10,913 rupiah at
the same time Monday.
In North Asian markets, both the won and the New Taiwan dollar
ended higher, in line with a rise in the yen against the dollar.
The won was also boosted by news early in the day that mass
strikes of banking-sector workers had been called off.
At the close of domestic trading, the U.S. dollar was quoted
at 1,371.50 won , down from 1,382.50 won at the previous close.
Interest-rate cuts by Taiwan's central bank had little effect on
trading in the local currency, as the authorities maintained
their interventionist stance in the foreign-exchange market, both
as buyers and sellers.
At the close of domestic trading, the U.S. dollar was quoted
at NT$34.482, down from NT$34.557 on Monday.