Won drops, Asian currencies poised for weekly gain
Won drops, Asian currencies poised for weekly gain
Bloomberg, Singapore
South Korea's won fell for the second day on speculation the central bank will sell it to protect the earnings of exporters after an official said that the currency rose "too fast."
The won's 0.5 percent gain against the dollar this weak threatens to erode the competitiveness of companies such as Hyundai Motor Co., the nation's biggest automaker.
The Bank of Korea is monitoring the won's performance versus the dollar and the yen, Oh Jae Kwon, head of the central bank's foreign- exchange team in Seoul, said.
The won declined 0.5 percent to 1,038.10 against the dollar as of 4 p.m. local time, according to Seoul Money Brokerage Services Ltd.
"Everybody thinks the authorities want to keep the won from rising past 1,030," said Sam Hong, a currency derivatives department manager at Shinhan Bank in Seoul. "The authorities will strongly intervene."
Exports account for about 40 percent of the Korean economy. The commerce ministry on Jan. 4 forecast export growth will slow to 12 percent this year from 31 percent in 2004, partly because of the won's appreciation.
South Korea's central bank on Dec. 2 said it bought dollars to stall won gains. Currency holdings rose to a record $199.1 billion last month, the bank said on Jan. 4.
The Taiwan dollar fell for a second day after the benchmark stock index dropped, fanning speculation investors abroad will increase sales of the island's shares.
Overseas money managers on Thursday sold a net NT$5.6 billion ($176 million) of Taiwan's stocks, the most since Jan. 5, according to stock exchange figures. The Taiex index of equities had a weekly decline.
Taiwan's dollar fell 0.1 percent to NT$31.919, according to Taipei Forex Inc. The currency may slide as low as NT$32.05 today, Ho said.
Other Asian currencies also fell after Johnson & Johnson, the world's biggest maker of medical devices, said it will return about $11 billion in overseas profit to the U.S., taking advantage of a one-year tax break.
"The dollar rose against Asian currencies because of the report on Johnson & Johnson sending the money into the U.S.," said Rafael Algarra, head of currency and fixed-income trading at Security Bank Corp. in Manila.
Thailand's baht weakened 0.1 percent to 38.60 and the Singapore dollar fell 0.1 percent to S$1.6387. Trading may be less than usual in the city-state because financial markets were closed for a holiday.
The Philippine peso weakened 0.1 percent to 55.53, according to the Bankers Association of the Philippines. The currency may trade between 55.55 and 55.65 through next week, Algarra said.
Philippine Finance Secretary Juanita Amatong, who helped the administration of President Gloria Arroyo narrow the nation's budget deficit, said she's resigning after more than a year in office. She said she expects Trade Secretary Cesar Purisima to replace her.
"It's neutral news" for the peso, Security Bank Corp.'s Algarra said. "There was a resignation, but Purisima is highly valued by the market."
The region's currencies were poised for a weekly gain on speculation China and Malaysia will alter their pegged exchange rates to allow for gains.
China will probably let its currency appreciate against the dollar by the end of June, Merrill Lynch & Co. yesterday said in an interview.
Merrill, the world's largest securities firm, expects that faster inflation will prompt policy makers in China to revalue the yuan 10 percent higher against the U.S. currency, it said.