Asian Currencies Roused By Dull $
Asian currencies leapt yesterday as the US dollar slid against the yen and stock markets across the region took their cue from Wall Streets second session of gains. The dollar was hovering around 131 yen in late Asian trade against an overnight high of 132.95 yen, partly due to a rebound in Tokyo stocks. Soothing comments about Asias financial crisis by officials from the US and IMF spurred players to reduce dollar holdings. Dealers said the gains were accelerated by stop-loss sales of the US dollar in thin markets for some Asian currencies, but few were willing to bet on a turnaround in sentiment.
The Dow did pretty well yesterday and thats leading the Asian stock markets and adding to the speed of the recovery in the currencies, said a US bank dealer in Singapore. But Im still not too optimistic on Indonesia. Basically, I see this as a correction in the dollar.
Indonesian President Suhartos promises to move quickly on economic reforms tied to an $43 billion IMF-led bailout calmed nerves somewhat. IMF MD Camdessus comment that Indonesia needed to accelerate overdue reforms and the fund expected a new letter of intent from Jakarta committing itself to such reforms had little impact.
The baht firmed to 53.00-20 to the dollar onshore against 55.70-55.90 late on Tuesday. Offshore, it was sharply higher at 50.55-85 against 53.50-54.00. The Malaysian ringgit was sharply higher at 4.3050-150 to the dollar against 4.6050-6350 late on Tuesday as US, European and Japanese banks unwound their long dollar positions, triggering stop-loss dollar sales. We may be in for a sharp retracement after recent overshooting, a European bank dealer in Singapore said. Dealers said the ringgits moves were difficult to predict due to a very thin market.
The Singapore dollar was firm at 1.7470/1.7520 to the US dollar, off its early highs, but well up from 1.7735 late on Tuesday as the stock market surged 7.50 per cent to close at 1,243.27. Reassuring words about Singapore banks bad loan exposure in the region also put a shine on the domestic dollar, but dealers said it faced a strong barrier at 1.7250. The peso was at 42.00-43.00 to the dollar against Tuesdays 43.62 close.
The South Korean won firmed to 1,660 to the dollar from Tuesdays 1,682 close, buoyed by foreign inflows to the stock market and news that Koreas two main labour groups had agreed to join a committee to discuss industrial restructuring. The Taiwan dollar also fell off its highs as the yen lost some ground, but remained firm at T$34.093/100 to the US dollar from a previous T$34.365 close. (Reuters)