Yen's rebound drives Asian currencies
Yen's rebound drives Asian currencies
SINGAPORE (Dow Jones): Southeast Asian currencies snapped back
from Tuesday's lows during Asian trading on Wednesday, boosted by
the yen's rebound against the U.S. dollar.
The dollar slipped against the yen as investors took profits
on the greenback's earlier sharp gains against the Japanese
currency, dealers said.
At late trading, the dollar was trading at 121.11-14 yen, down
from 122.34 yen in New York and 122.31-34 yen here late Tuesday.
Caught short in the regional currencies by the U.S. dollar's
retreat, interbank traders scampered to cover their positions,
pushing the Singapore dollar, the Thai baht and the Philippine
peso upwards to end Asian hours higher against the U.S. currency.
North Asian currencies benefited too, as the new Taiwan dollar
and the South Korean won both regained ground lost in recent
days. The Indonesian rupiah also rose.
"Asian regional currencies are closely tracking the yen, and
the yen's exchange rate is a reflection of where we stand in the
global deleveraging process," said Prasenjit Basu, Singapore-
based regional economist at Credit Suisse First Boston. Swings
both in the yen and in the regional currency exchange rates,
explained Basu, are being determined largely by market
expectations of the timing of further cuts in U.S. interest
rates.
But while attention will continue to focus on the Fed's
meeting next Tuesday, regional currencies will still find
support, whatever the decision on interest rates, according to
some analysts.
After opening sharply higher, the Singapore dollar advanced
further through the course of the day, with the U.S. dollar
dropping to end Asian trading hours at S$1.6495, down steeply
from S$1.6605 a day previously.
The Thai baht also ended higher after sales of the U.S. dollar
by market players looking to exit long positions in the U.S.
currency triggered successive stop-loss orders, which in turn
pushed the baht higher still.
As interbank trading in the Singapore market wound down, the
U.S. dollar had slipped to 36.70 baht, down from 37.19 at the
same time the day before.
The Philippine peso, too, ended higher, boosted by the yen's
bounce.
At the close of trading on the Philippine Dealing System, the
U.S. dollar was quoted at 40.57 pesos (PHP), down from PHP41:00
at the end of Tuesday's session.
Most market participants remain bullish on the peso, saying
foreign direct investment and remittances from expatriate
Filipinos will bolster the currency over the coming months.
Although an end to Indonesia's political transition may seem
distant, this week's meeting of the People's Consultative
Assembly, which is tasked with drafting new electoral laws, is
one of the biggest hurdles to be overcome, according to Basu at
CSFB.
"If the Assembly can come up with a set of rules that all the
political parties find acceptable, it will become worth
considering the rupiah's potential up side," said Basu at CSFB.
Late in Asia on Wednesday the U.S. dollar ended at Rp 7,687
rupiah, down from Rp 8,075 late the day before.
Meanwhile in North Asia, the U.S. currency ended trading
against the new Taiwan dollar at NT$32.681, down from NT$32.766
at Tuesday's close. Against the won, the U.S. dollar closed at
1,315.70 won, down from 1,318 won the day before.