Yen's gain against dollar pushes Asian currencies
Yen's gain against dollar pushes Asian currencies
SINGAPORE (Reuters): Asian currencies profited from a sharp
rise in the value of the Japanese yen yesterday, pushing back
against the U.S. dollar on several fronts.
News of the completion of talks between Indonesia and the
International Monetary Fund (IMF) on a new economic reform
package was supportive with most dealers awaiting details due to
be announced yesterday.
"The strength of the yen was the key factor in the recovery of
the Asian currencies," said Andy Tan, general manager of Standard
& Poor's/MMS in Singapore.
"In the morning there was some weakness and quite a few of the
German, Japanese and U.S. investment houses were selling Asian
currencies. But sentiment improved after the Asian lunch break,
so we have seen the currencies recouping most of their losses,"
he said.
The yen broke up through 133 to the U.S. dollar late in the
Asian afternoon to reach a high of 132.80, taking many of the
other regional currencies with it.
The Singapore dollar rose to 1.6040/60, from a low of 1.6170
at midday, with dealers reporting buying from several large
institutions. The Malaysian ringgit also firmed, climbing to
3.7100/400, from an early low of 3.7580.
The Indonesian rupiah wobbled between 8,400 and 8,600 to the
dollar and gradually strengthened to the top of the range at
8,400/500 after news of the completion of talks with the IMF.
Indonesian Coordinating Minister for Economic, Finance and
Industry Ginandjar Kartasasmita said his government had finished
talks on a revised reform package and full details would be
released yesterday.
But Ginandjar said Indonesia would follow a Mexican model for
corporate debt and would not bail out indebted firms.
And he predicted the Indonesian economy would shrink four
percent in 1998/99 -- slightly less pessimistic than most
forecasts by private-sector analysts.
"The package looks good, but all three of them have looked
good," said Tan. "What we need is not fine words but tangible
action."
Dealers said the rupiah was likely to stay between 8,300 and
8,700 to the dollar in the near future. Any break below 8,700
would suggest views on Indonesia were changing for the worse.
Some other Southeast Asian currencies nudged down a little
amid reports of interbank buying of dollars.
The Thai baht fell to 40.20/35 to the dollar from 39.95/40
with dealers apparently ignoring a small rise in Thai interest
rates. Dollar demand in the offshore market was cited as the main
factor, depressing the baht.
"It seems the market saw a price above 40 as a cheap
opportunity to buy dollars. The baht hasn't really changed much,"
said a dealer.
The Philippines peso edged down to 38.05/15 from a strong
opening at 37.90 as banks covered short dollar positions.
The Korean won broke up through 1,400 to the dollar in early
trade as the yen boosted sentiment, but later slipped back down
to 1,409/16, from Tuesday's close at 1,435.
Dealers said a move by Duff and Phelps to raise South Korea's
long-term foreign currency rating to BB+ from BB on Tuesday had
helped support demand for the currency.
The Taiwan dollar resisted the yen rise, falling to 33.024/040
after wobbling around 33 for several days.
"The Taiwan central bank warned against speculation yesterday
and that seemed to have an impact for a while. But that has now
worn off," one dealer said.
The Hong Kong dollar was fractionally weaker at 7.7490/00 to
the dollar.