Southeast Asian currencies rise on back of robust yen
Southeast Asian currencies rise on back of robust yen
SINGAPORE (Dow Jones): Regional currencies across Asia gained ground against the U.S. dollar during local trading hours on Wednesday, supported by a stronger yen and generally bullish stock market sentiment.
After opening on a soft tone following an overnight drop in the yen, both Southeast Asian and North Asian currencies recovered from early lows as the Japanese currency rallied.
Traders and investors alike moved in to bid up Asian currencies in response to the market's growing conviction that Japan will implement further fiscal stimulus measures later in the year.
"We are seeing some inflows of funds from foreign investors," said the head trader at one Thai bank.
Towards the end of Asian trading, sales had pushed the U.S. dollar to 37.4700 baht, down from 37.6150 baht at the same time the day before.
The Singapore dollar also benefited from positive investor sentiment, despite a moderate sell off in the local stock market.
"It looks like sentiment has changed. What we are seeing is a sound rally in the Singapore dollar," said a trader at a local bank, adding: "With no big sellers around, I think the currency is going to get stronger."
In recent sessions market participants have held back from buying the Singapore dollar for fear that the Monetary Authority of Singapore would intervene to push the currency down, should it strengthen too far on a trade-weighted basis.
But as the Singapore dollar's continuing bull-run has failed to prompt MAS action, traders have become more confident about the Singapore dollar's prospects.
"Everyone was expecting intervention. But I don't think the MAS is likely to come in if the rest of the Asian regional currencies are also getting stronger," said one trader.
Towards the end of Asian trading the U.S. dollar had been sold down to S$1.6953, from S$1.6988 a day earlier.
Strong support for the U.S. dollar should emerge at levels between S$1.6900 and S$1.6920, said traders. But if S$1.6900 is broken, "We are on the way back to the S$1.56 level," according to one bullish dealer. Others expect firm support at S$1.6550.
Against the Indonesian rupiah, the U.S. dollar dropped to Rp 8,548, down from Rp 8,603, as some dealers reported rupiah purchases from offshore players in search of handsome double digit yields.
In North Asia, a combination of the yen's rally, continued investment inflows and month-end revenue repatriation by exporters helped the South Korean won and the New Taiwan dollar to maintain their firm tone, even though local stock markets surrendered some recent gains.
The U.S. dollar fell as low as 1,177 won under the selling pressure, before the state-run Export-Import Bank entered the market buying dollars to support the U.S. currency.
At the close, the U.S. dollar finished at 1,179.60 won, down from 1,182.90 won the previous day.
In Taipei, the New Taiwan dollar managed to inch marginally higher, despite healthy local corporate demand for the U.S. currency, which absorbed most of the available inflows.
At the close, the U.S. dollar was quoted at NT$32.681, down just a fraction off NT$32.682 at Tuesday's close.
The Philippine peso, however, failed to keep pace with the run-up in other regional currencies, despite a 1.6 percent rally in the local stock market.
After dropping to an intraday low of 37.976 pesos, the U.S. dollar recovered, to finish the day a touch higher on buying to cover short positions, according to traders.
At the close of local trading, the U.S. dollar was at 38.030 pesos, up slightly from 38.010 pesos at the end of Tuesday's session.