Southeast Asian currencies down in thin trading
Southeast Asian currencies down in thin trading
SINGAPORE (Dow Jones): Southeast Asian currencies fell in thin, range-bound trading yesterday, unable to take much direction from the Japanese yen with Tokyo out on holiday.
Despite the release of an unexpectedly good June non-oil exports number, the Singapore dollar led regional currencies lower.
"Most people were caught by surprise," said one trader at a Japanese bank in Singapore.
"Traders were caught long U.S. dollars on the higher end, and the dollar came down quite fast after the number was reported," he said. The trader added that continuing bearish rumors then pushed the U.S. dollar up against the Singapore dollar once again.
One rumor making the rounds out of London is that the Sultan of Brunei had asked the Bank of England to help him track down millions of dollars missing from state and family coffers in the Sultanate. Brunei maintains a one-for-one exchange rate between the Brunei dollar and the Singapore dollar.
A trader at a British bank said rumors that the Monetary Authority of Singapore would devalue the currency, first heard over the weekend in New York, were still weighing on the Singapore dollar in the afternoon
"It is extremely unlikely (that the MAS would devalue), but the rumor is out there in the market," he said.
In late Asian trading, the U.S. dollar is quoted at S$1.7005, up from S$1.6925 late on Friday.
A trader at a French bank in Singapore said the Singapore dollar may have a bit more room to strengthen.
"The market is still long, so the U.S. dollar may come a bit lower to S$1.6900," the trader said.
Winston Koh, market strategist for JP Morgan in Singapore, said trading in regional currencies is likely to remain thin until Japan picks a new leader on Friday.
Prime Minister Ryutaro Hashimoto resigned last week to take responsibility for the ruling party's losses in elections to the upper house of Parliament, and a new leader is expected to be chosen Friday.
People are still taking a wait-and-see attitude towards elections in Japan," Koh said. "Few are inclined to take aggressive positions in the regional currencies."
Koh said that, over the medium term, weakness in the regional currencies is more likely than strength, based on fundamentals in Southeast Asian economies.
"If the new government in Japan doesn't act quickly, Asian currencies will weaken. If it does act, Asian currencies may not weaken as fast, but the trend is for some weakness due to fundamentals," Koh said.
In late Asian trading,, the U.S. dollar was quoted at 4.1200 ringgit, up from 4.0925 ringgit late trading Friday.
The Thai baht strengthened late in Asian trading Monday, tracking the Singapore dollar, dealers said. The greenback is quoted at 40.9650 baht, down from 41.1250 baht late Friday in Asia.
On the Philippine Dealing System, the peso gained against the dollar in line with the baht. The U.S. dollar finished the day at 41.845 pesos, down from 42.360 pesos at close of business on Friday.
The Indonesian rupiah ended a volatile yesterday little against the dollar reaching almost 14,450 rupiah, compared with 13,350 late on Friday.
"The rupiah is driven by very thin flows in the market," said JP Morgan's Winston Koh. "Dollar sales seen last week by Indonesian banks has eased, so the rupiah is going back to where it was before."