Won soars to 4-month high as rupiah falls
Won soars to 4-month high as rupiah falls
HONG KONG (Dow Jones): Soaring market sentiment drove the
South Korean won to its highest level in over four months
Thursday, prompting central bank intervention to suppress the
currency's rise.
Asia's other regional currencies fared less well, as market
concerns over Aceh's calls for independence plunged the rupiah to
its lowest level since Indonesia's presidential elections three
weeks ago.
The nervousness spilt over to affect other Southeast Asian
markets, dragging the Singapore dollar, Thai baht and Philippine
peso lower.
Sentiment toward South Korea, already riding high after a
long-expected liquidity crisis failed to materialize, was further
boosted Thursday when ratings agency Standard & Poor's Corp.
upgraded the country's sovereign ratings, citing the strength of
its economic recovery.
The upgrade triggered heavy buying of the local currency,
which briefly pushed the dollar to a four-month low of 1,169.70
won before the Bank of Korea stepped into the market to buy
dollars in a rare direct intervention.
"Continued strong portfolio capital inflows from abroad and a
good supply of dollars to the market from local exporters have
led to intense appreciative pressure on the won in the last few
days," explained David Simmonds, Asian currency strategist at
Citibank in Singapore.
By the end of trading in Seoul, the central bank's
intervention had lifted the dollar from its earlier lows. But
closing at 1,173.10 won, the U.S. currency remained well below
Wednesday's close of 1,180.00 won.
Investment inflows and exporters' sales of U.S. dollars also
lifted the New Taiwan dollar Thursday. At the close of dealing in
Taipei, the U.S. currency was quoted at NT$31.745, down from
NT$31.754 the previous day.
In Southeast Asia, the market's growing concern that calls for
independence by the North Sumatran province of Aceh could evolve
into a fresh Indonesian crisis triggered heavy buying of dollars
against the rupiah.
Market participants who went long in the rupiah at the time of
Indonesia's presidential elections three weeks ago anticipating a
major post-election rally were seen buying dollars to cover their
positions.
In conditions of thin market liquidity, the buying rapidly
pushed the dollar above the 7,000 rupiah mark to reach Rp 7,150
late in Asian trading, up over Rp 250 compared with Rp 6,897 late
the previous day.
The rupiah's fall soured sentiment toward other currencies in
the region, dragging the Thai baht, the Singapore dollar and the
Philippine peso all lower.
Dealers also cited Thailand's political backdrop as a reason
to sell the baht, saying an opposition no-confidence motion
tabled for next month was deterring foreign investment in the
country.
Late in Asian trading, the dollar had risen to 39.0450 baht,
up from 38.9600 baht the day before.
The Singapore dollar also slipped in line with the regional
trend, with some traders suggesting that market participants
caught long in the rupiah were attempting to hedge their exposure
by selling the Singapore dollar short.
Toward the end of Asian interbank dealing, the U.S. currency
was quoted against the Singapore dollar at S$1.6763, up from
S$1.6723 the previous day.
The Philippine peso also closed down, with the U.S. dollar
rising to end trading in Manila at 40.323 pesos, up from 40.270
pesos at Wednesday's close.