Soft dollar helps poor Asian currencies
Soft dollar helps poor Asian currencies
SINGAPORE (Reuters): Asian currencies firmed on the back of a lower U.S. dollar on Thursday as activity dwindled to commercial flows after the previous day's sharp falls caught many interbank traders short of dollars.
Dealers said the dollar's drop to three-month lows against the yen overnight kept Asian currencies on relatively firm footing, but they showed little inclination to revisit recent highs.
"The stronger yen should enable Japanese companies, that have been providing funds to Asian countries, to roll over their debts," the head of regional currencies trading at a European bank in Singapore said.
"But the interest is more on demand and supply today. There's not much interbank activity going on because some players were hurt by yesterday's moves," he said.
The Thai baht's abrupt drop late on Wednesday from highs near 46.00 to the dollar triggered falls in other Southeast Asian currencies, which had been climbing steadily this week after Bangkok scrapped a two-tier trading system and Indonesia took steps to address its corporate debt problems.
Dealers attributed the baht's fall to a range of factors including fears about King Bhumibol Adulyadej's health and a huge Thai corporate order for dollars to settle debt payments.
"Local Thai companies had to buy about $300 million for a loan redemption and the market was short. U.S. funds joined in the selling when the dollar broke 49.00 and that exacerbated the baht's fall," the dealer said.
The baht firmed back above the 50 per dollar level on Thursday as concerns about the king eased after he appeared on television on Wednesday night.
But dealers said dollar demand from U.S. and Thai names would block its rise near the 47.50 level to the dollar.
The Indonesian rupiah hovered below the 9,000 per dollar level, but dealers said fears of central bank intervention would limit its falls to 10,000 for the time being.
The Malaysian ringgit remained above 4.00 to the dollar for most of the day after recovering in overseas markets on comments by Finance Minister Anwar Ibrahim.
The Singapore dollar nudged higher in late trade after the Thai Bankers' Association said it favored using the Singapore dollar as common currency for trading within the Association of Southeast Asian Nations (ASEAN).
The Philippine peso ceded some ground to importer demand for dollars around the 40 level, while portfolio flows to the stock market fizzled out.
The Taiwan dollar finished higher for the fourth straight day, gaining from the yen's rise and expected foreign inflows to the stock market.
Taiwan's stock index has risen 6.64 percent since Monday, Foreign funds bought a net T$3.7 billion worth of Taipei stocks on Wednesday.
The Hong Kong dollar was steady but dealers cited fears of rising interest rates amid indications players were beginning to take long-term short positions in the currency.