SE Asian monies up as traders trim long greenback position
SE Asian monies up as traders trim long greenback position
SINGAPORE (Dow Jones): Fearful of overextending their
positions, participants in Asian regional foreign exchange
markets sold U.S. dollars on Friday, lifting Southeast Asian
currencies above levels seen on Thursday.
The Singapore dollar, the Thai baht and the Philippine peso
all rose to end the day stronger against the U.S. currency, while
in North Asia the Korean won bounced back from its early low to
finish the session only slightly weaker. The New Taiwan dollar
edged higher.
Despite the air of caution which prevailed as traders and
investors booked profits from the U.S. currency's run-up earlier
in the week, most analysts and dealers still expect the U.S.
currency to resume its upward trend over the coming week.
"It is the almost universal outlook of offshore operators that
the yen will weaken, so most people are sitting on their long
dollar positions expecting to see Asian currencies maintaining a
broadly weak tone," said Daniel Lian, head of Asian markets
research at ANZ Investment Bank in Singapore.
Despite the market's bullish longer-term dollar view, long
liquidation was the dominant theme during Asian hours Friday,
with U.S. commercial and investment banks seen as heavy sellers
of the U.S. currency against the Singapore dollar and the Thai
baht.
By the end of local interbank trading in Singapore, the U.S.
dollar had slipped to S$1.7302, down from S$1.7341 late on
Thursday, and well below the near six-month intraday high of
S$1.7390 hit early Thursday.
But with good support for the U.S. dollar seen between
S$1.7200 and S$1.7250, most market participants are expecting the
U.S. currency to rally to S$1.7500 over the coming week.
Against the Thai baht, the U.S. dollar dipped to close Asian
dealing at 37.6100 baht, down from 37.6750 baht late Thursday.
In the Philippines, where the government announced on Friday
that inflation dropped to an annual 9.9 percent in February from
11.6 percent in January, analysts argue that the central bank now
has plenty of room to bring short-term interest rates down from
around 13 percent and to allow the peso (PHP) to weaken.
At the close of trading on the Philippine Dealing System on
Friday, the U.S. currency was quoted at 39.125 pesos, down from
39.220 pesos at the previous close.
Because the Philippines, like some other countries in Asia
including South Korea, operate closed capital accounts, the
central bank has the leeway to bring down domestic interest rates
without worrying greatly about the reaction of the offshore
market.
Indonesian rupiah ended steady against the U.S. dollar in
listless trading Friday as dealers awaited news on the
development of the government's banking recapitalization plan.
The dollar closed at 8,930 rupiah in the spot market,
virtually unchanged from its close Thursday at 8,900 rupiah.
The U.S. currency, however, ended higher this week than last
week at 8,855 rupiah.
The government suddenly delayed the decision to close more
ailing banks last week until mid-March. The move sparked
speculation that the government bowed to pressures from powerful
bank owners, whose banks faced closure.
Dealers also attributed the trading lethargy to the lack of
fresh market-moving news as well as the coming weekend.
"The dollar was moving within a range of 50 rupiah," a dealer
added. "It's hard to make profit from such a narrow trading
range."
Dealers expect trading to remain peaceful Monday. The dollar
is seen trading between 8,700 rupiah and 9,000 rupiah on Monday,
depending also on the dollar's movement against the yen.
At the close, the U.S. currency ended domestic trading at
1,242 won, up from 1,239.50 won the previous day.
Against the new Taiwan dollar, the U.S. currency ended at
NT$33.16, down a touch from NT$33.17 at Thursday's close.