Southeast Asian currencies slip back against greenback
Southeast Asian currencies slip back against greenback
SINGAPORE (Dow Jones): Both North Asian and Southeast Asian currencies slipped back against the U.S. dollar during Asian hours on Tuesday.
While the regional currency sell-off was driven partly by an abrupt slide in the yen, many traders said that the fall, at least in the cases of the South Korean won and the Singapore dollar, was assisted by the tacit approval of the local central banks.
In the Seoul market the won (KRW) gave back the gains it made on Monday, when the local currency finished at its highest closing level against the U.S. dollar in over a year.
At the close of local trading, the U.S. dollar was quoted at 1,204 won, up from 1,193 won a day previously.
Traders attributed the won's decline to dollar purchases by Korean banks, which, according to some, were executed on behalf of the Bank of Korea.
All the pressure on the won is for the currency to continue to appreciate, but the central bank is uncomfortable to see the currency so strong," said one North Asian analyst, asking to remain anonymous.
In addition to buying U.S. dollars through agent banks, the Korean central bank was said to be using so-called "moral suasion" - wielding its influence behind the scenes - to take the steam out of the won's rise.
But although the central bank is believed to be targeting an exchange rate of around 1,200 won to the U.S. dollar, many analysts argue that the won's medium-term tendency will still be to appreciate.
Traders and analysts also pointed to similar forces at work in the Singapore dollar market, where the local currency weakened against the U.S. dollar Tuesday.
November trade figures released Monday also showed a dismal export-sector performance for Singapore, where non-oil domestic exports declined 6.5 percent in local currency terms compared with the same month the year before.
On Tuesday, however, bids from local banks helped force the Singapore currency slightly lower, leading many traders to detect the hand of the Monetary Authority of Singapore.
According to MAS figures, Singapore's foreign reserves rose by an average of 9.2 percent a month in U.S. dollar terms between June and October 1998, compared with the same period a year ago.
This rise is evidence, say analysts, that the de facto central bank has actively been buying U.S. dollars against the local currency in an attempt to check the Singapore dollar's rise.
Late in Asia Tuesday, the U.S. dollar was quoted at S$1.6538, up from S$1.6453 the day before.
Among other regional currencies, the rupiah, too, ended the day lower, driven down, said dealers by sales of the local currency from state banks in Jakarta.
As Asian trading drew to a close, the U.S. dollar was quoted at 7,785 rupiah, up from 7,675 rupiah the day before, and right in the middle of the Rp 7,500 to Rp 8,000 that Bank Indonesia is believed by traders to be targeting.
The Thai baht also ended lower, although traders said that market activity remained extremely subdued.
Late in Asian trading, the U.S. dollar was at 36.3450 baht, up from 36.1300 baht late Monday.
On the Philippine Dealing System, the U.S. dollar edged higher against the peso to close at 39.09 pesos, up from 39.00 pesos at Monday's close on volumes of a mere $61.2 million, down from $81.6 million the day before.
The new Taiwan dollar also retreated from levels seen on Monday, with the U.S. dollar rising to close at NT$32.253, up from NT$32.247 at the previous close.