Taiwan dollar at 19-month low, SE Asian monies mixed late
Taiwan dollar at 19-month low, SE Asian monies mixed late
SINGAPORE (Dow Jones): The cloud of gloom has shifted from
Southeast Asian currency markets to their neighbors in the North,
as the New Taiwan dollar's collapse to a 19-month low dealt a
fresh blow to the floundering South Korean won, dealers said.
Southeast Asian currencies were generally mixed - the weakness
in the North dented the Singapore dollar; the Indonesian rupiah
was flat, while both the Thai baht and the Philippine peso were
stronger.
The rupiah ended flat in Asian trade Wednesday, with investors
waiting to see who the government will appoint to head the
central bank.
After last week's resignation of acting governor Anwar
Nasution and four other governors, investors are worried that the
central bank could lose its policy focus while politicians
wrangle over a new central bank head.
The dollar remained in a narrow range on Wednesday with no
fresh news on the central bank reshuffle. The U.S currency closed
at Rp 9,450 in Asia, almost flat from Rp 9,455 at Tuesday's
close.
Most players think that despite the risk of policy confusion,
the central bank should keep in place its policy to mount a
defense of the rupiah at Rp 9,500 to the dollar. This should form
solid dollar resistance on Thursday.
Longer term, investors are worried political meddling in the
central bank could increase the risk of inflation, as Bank
Indonesia comes under pressure to absorb government losses from
bailing out the financial system.
The won, already bruised by a raft of domestic and
international pressures, skidded to its lowest level in more than
a year when Taiwan's central bank retreated from its defense of a
key support level for the New Taiwan dollar, dealers said.
The U.S. dollar finished at 1,176.90 won, its highest close
since Nov. 17, 1999, when it ended at 1,178 won. The U.S.
currency ended Tuesday at 1,167.50 won.
In another effort to slow the steep depreciation of the won
against the U.S. dollar, South Korea's Financial Supervisory
Service Wednesday asked banks to closely monitor the foreign
exchange transactions of companies to reduce their exposure to
foreign exchange risks amid heavy volatility.
Much of the won's recent weakness stemmed from offshore
selling of Korean equities, dollar buying by local importers to
cover the rising cost of oil and speculative trading, said Peter
Redward, a currency strategist at Deutsche Bank.
Against the New Taiwan dollar, the U.S. dollar closed at a 19-
month high of NT$32.870, up from Tuesday's close of NT$32.493.
Redward at Deutsche Bank said a breakdown of Korean gross
domestic product and Taiwanese industrial production data
unveiled Wednesday revealed "an increasing reliance on
information technology to drive growth."
"This is of concern to the market given the weak state of
global semiconductor stocks and an emerging global economic
slowdown," he added.
The Singapore dollar was dragged down by the South Korean won
and the New Taiwan dollar.
The U.S. dollar climbed to S$1.7564 from S$1.7543 late
Tuesday.
In Thailand, higher offshore swap premiums, which raises
short-term funding costs, prompted offshore players to cover
their short baht positions, helping the Thai currency extend
Tuesday's rebound, dealers said.
Around 0920 GMT, the dollar was at 43.825 baht, down from
44.175 baht late Tuesday.
On the Philippine Dealing System, the peso was boosted by
strong remittance inflows from overseas Filipino workers and a
lack of corporate demand, offsetting the central bank's suspected
buying of dollars to replenish its foreign exchange reserves,
dealers said.
The dollar closed at 49.120 pesos, down from Tuesday's close
of 49.490 pesos.