Singapore dollar, baht rise on back of stronger yen
Singapore dollar, baht rise on back of stronger yen
Christina Soon, Bloomberg, Singapore
The Singapore dollar had its biggest gain in almost nine months and Thailand's baht rose after the yen strengthened, reducing the need for Asian central banks to sell to protect exporters against Japanese competition.
The yen's 5 percent advance against the U.S. currency in the past six months exceeds the Singapore dollar's 3.9 percent gain and the baht's 2.8 percent appreciation, making Japan's exports such as Toshiba Corp.'s computer chips more expensive than rival goods in the region.
The yen's gain "makes the other Asian central banks a lot less concerned about" their currencies' advance, said Sameer Goel, a Singapore-based currency strategist at Bank of America Corp. "The yen is a very major factor."
Singapore's currency rose 0.5 percent to S$1.6521 against its U.S. counterpart as of 4:23 p.m. local time, and the baht gained 0.5 percent to 39.60. The yen was at 104.89 from 105.22 late in New York on Dec. 10, according to electronic currency dealing system EBS.
The Singapore dollar last week dropped 1.1 percent and the Thai baht fell 1.2 percent as the yen weakened 1.7 percent.
Thailand's currency reserves rose 1.2 percent to a record US$48.7 billion in the week ended Dec. 3 from $48.1 billion the week before, the central bank said on Dec. 9. Foreign reserves in Singapore gained 4 percent to $110 billion in November from the previous month, according to the Monetary Authority of Singapore.
The figures "suggest some central banks had been intervening" to buy dollars, Goel said. Any local currency sales "were at best smoothing out the gains, but by no means an attempt to force the direction" away from the appreciation.
The Singapore dollar may rise to S$1.61 by the end of the first quarter, and the baht will probably climb to 38, Goel said.
The Sri Lankan rupee fell to a record of 105.185 against the dollar after two people were killed in a grenade attack at a concert in the capital Colombo on Dec. 11. The lack of support by the Central Bank of Sri Lanka added to the decline, said Dudeepa Ratwatte at Hatton National Bank.
"The concert blast has had an impact and there is no confidence in the rupee," said Ratwatte, chief manager of bonds and currency at Hatton National Bank in Colombo. "We don't expect intervention from the central bank until the rupee drops further." The currency may fall to 106 early next year, Ratwatte said.
South Korea's won had its biggest gain in more than two weeks on speculation its first weekly drop against the dollar in 11 last week tempted the country's exporters to convert overseas earnings into their home currency.
A falling won raises the foreign-exchange proceeds Korean exporters such as Hyundai Motor Co., the country's largest carmaker, can earn abroad, which may have prompted some to accelerate the conversion of profits.
"There's some won-buying pressure from exporters," said Sang Hyun Ahn, a currency dealer in Seoul at Citibank Korea Inc. "Exporters want to buy the won now" after it fell Dec. 10.
The won climbed 0.5 percent to 1,061.90 against the dollar, its biggest advance Nov. 26, according to Seoul Money Brokerage Services Ltd.
The Taiwan dollar pared gains after the benchmark stock index fell, raising concern overseas investors will take out funds.
The currency had risen after opposition parties retained control of parliament in legislative elections, which may keep President Chen Shui-bian's pro-independence stance in check and ease tension with mainland China.
The Taiwan dollar closed little changed at NT$32.45 against its U.S. counterpart after climbing as much as 0.5 percent, according to Taipei Forex Inc. The Taiex index of stocks fell 0.6 percent after rising 1.1 percent.
'Suddenly Fell'
"The Taiwan dollar trimmed gains in the afternoon because the stock index suddenly fell," said Jerry Ho, a currency trader at International Bank of Taipei. "That triggered concern global investors are still concerned about Taiwan's political outlook."
Money managers abroad today sold a net NT$370 million ($11 million) of Taiwan's equities, a sixth day of sales, according to stock exchange figures.
The opposition Nationalist Party and its allies on Dec. 11 won 114 of 225 seats in the Legislative Yuan, blocking a campaign by Chen's ruling Democratic Progressive Party to seize parliament for the first time.
In other trading, India's rupee climbed 0.9 percent to 44.3225. The Philippine peso closed little changed at 56.315, according to the Bankers Association of the Philippines.