Thai baht strengthens to a record 1-month high
Thai baht strengthens to a record 1-month high
SINGAPORE (Bloomberg): The Thai baht strengthened to its
strongest in more than two months Thursday as other Southeast
Asian currencies were little changed.
Dealers said baht rose 0.8 percent to 40.13 to the U.S.
dollar, its strongest since July 17, as the flow of new
investment into the country boosts demand for the currency.
"Economy-wise, Thailand still isn't in too good a shape, but
on the trade front, they are continuing to post surpluses, which
is good for the currency," said Terence Ngooi, senior manager for
strategic trading at Sanwa Bank in Singapore.
Thailand's current account -- an indicator of the flow of
trade, services and investments into and out of a country -- has
shown a surplus each month since Sept. 1997. Before that, no
monthly surplus was recorded for 11 years.
Last year, Thai domestic demand for imported goods collapsed
following the baht's devaluation. Yet, the weaker currency made
Thai exports more competitive and boosted demand for the
country's currency to pay for Thai goods and services.
Other Southeast Asian currencies were little changed as
traders looked to more volatile currencies like the Deutsche mark
and Japanese yen for money-making opportunities.
"Traders are steering away from trading the Asian currencies
-- the risks are greater and there are fewer opportunities to
make money," said Derek Kwok, chief trader at Credit Agricole
Indosuez.
The rupiah was little changed at 11,020 to the U.S. dollar.
The Malaysian ringgit was at 3.80, where it has stood since the
exchange rate was fixed by the government on Sept. 2. The
Singapore dollar rose 0.4 percent to 1.7212. The Philippine peso
was little changed at 44.459.
Earlier this month, Malaysia introduced capital controls that
included a ban on trading the ringgit outside the country. The
move -- aimed at stopping speculation that sent the ringgit on a
roller-coaster ride for most of the last 12 months -- raised
fears other Asian countries may do the same, increasing the risk
of being unable to settle trades.
The yen fell against the dollar for a fifth day, touching a
two-week low, as currency traders remained skeptical Japan will
be able to restore health to the debt-plagued banking industry
anytime soon.
U.S. President Bill Clinton on Tuesday urged Japanese Prime
Minister Keizo Obuchi to use public money to aid troubled banks,
according to U.S. Deputy Treasury Secretary Lawrence Summers. Yet
Japan's opposition parties are reluctant to do so.
"Despite the U.S. request, the Japanese problem isn't likely
to be settled easily because of the wide gap between the ruling
and opposition parties," said Tetsuhisa Hayashi, a foreign
exchange manager at Bank of Tokyo-Mitsubishi Ltd. "The yen was
sold because of the credit risk."
The yen reached 137.22 to the dollar, its lowest since Sept.
9. It was recently quoted at 136.84, down from 135.58 in late New
York trading Wednesday.
The Australian dollar was little changed, paring earlier
losses, as the U.S. dollar weakened after Federal Reserve
Chairman Alan Greenspan hinted the U.S. may cut interest rates.
Still, gains in the Australian dollar where checked by
investor concerns that a national election to be held on Oct. 3,
could result in the winning party failing to secure a big enough
majority to manage the economy effectively.
The Australian dollar, or Aussie, was little changed at to
58.17 U.S. cents from 58.00 cents late yesterday.
"In the medium term, talk of a rate cut will be a positive for
the Aussie," said Geoff Bowmer, vice-president of foreign
exchange at Bankers Trust Australia. "But the impact .. will be
limited in the short term until investors" see the election
outcome.
Investors are concerned the right wing One-Nation party,
campaigning on a platform of protectionism, could hold the
balance of power. Latest opinion polls show voter support for
Prime Minister John Howard's conservative coalition at 42 percent
and the opposition Labor party at 43 percent with One Nation at 6
percent.