Strong greenback demand puts pressure on Asian currencies
Strong greenback demand puts pressure on Asian currencies
SINGAPORE (Dow Jones): Asian currencies were weaker late
Monday and are expected to test key support levels this week as
some of the currencies break out of their recent consolidation
phase, dealers said.
Short-covering in U.S. dollar positions after the currency
pierced through key resistance levels and strong corporate dollar
demand put pressure on the Asian currencies Monday, dealers said.
"The general trend is for regional currencies to explore
softer levels," said David Simmonds, currency strategist at
Citibank in Singapore.
Even the threat of higher rates in Indonesia and gross
domestic product data showing a robust economic recovery in
Thailand failed to provide reprieve for the regional currencies.
Leading the regional market's weakness, the Indonesian rupiah
slid on short-covering of dollar positions, as the U.S. currency
continued its rebound after slipping below 8,500 rupiah late last
week, dealers said.
Bank Indonesia Deputy Governor Miranda Goeltom's remarks
Monday that short-term domestic interest rates could average more
than the expected 12% this year, "if political and economic risk
conditions become worse" failed to help the rupiah, dealers said.
"I don't think the differential is enough for people to be
keen in the rupiah, especially with the uncertain political and
social situation," a dealer at a UK bank said.
In late trading, the dollar climbed to Rp 8,635 from Rp 8,573
late Friday on strong buying by offshore players at around Rp
8,600 to Rp 8,610, dealers said.
However, dollar-selling by state banks within the range of Rp
8,610 to Rp 8,640 capped the dollar's rise, they added.
If the dollar pierces Rp 8,650, it is poised to aim for the
next resistance level of Rp 8,700, dealers said.
The Thai baht shrugged off Thailand's gross domestic data
issued Monday that indicated the economy is firmly on track in
its recovery from the 1997-1998 recession.
Thailand's economy is projected to grow 5.0 percent this year,
after expanding 5.2 percent in first quarter on year, in line
with expectations.
The dollar was at 39.205 baht, up from THB 30.045 late Friday,
and is poised to rise to THB39.40 in the short term, dealers
said.
The slump in regional currencies - in particular the baht -
helped erode the Philippine peso, dealers said.
The dollar closed at 42.655 pesos on the Philippine Dealing
System, up from 42.595 pesos at the previous close.
In South Korea, the dollar broke above stiff resistance at
1,120 won on dollar-buying by local importers and dollar short-
covering by local banks, dealers said.
The dollar finished at 1,122 won, up from Friday's close of
KRW1,116.20.
Against it Singapore counterpart, the U.S. dollar raced up to
a two-week high of S$1.7315, from S$1.7265 late Friday, mostly on
U.S. dollar short covering after it broke through S$1.7280
resistance earlier in the day, dealers said.
The dollar, which had recently been stuck in a range of
S$1.7190 to S$1.7260, is poised to test S$1.7350 as early as
Tuesday, dealers said.
The New Taiwan dollar finished lower Monday as outflows of
foreign equity funds from a falling stock market weighed on the
local unit, dealers said.
The U.S. dollar ended at NT$30.843, up from NT$30.838 at the
previous close.