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.