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.