|
PureBytes Links
Trading Reference Links
|
Friday, July 13, 2001
Asian currencies slip despite cloud over greenback
CATHY HOLCOMBE
Prev. Story | Next Story
--------------------------------------------------------------------------
Battered Asian currencies slipped another peg yesterday even as
reports circulated that the US dollar's safe haven status was crumbling.
The euro and the yen strengthened in Asian trade amid concerns of a
financial crisis in Argentina, leading to speculation that the dollar's long
run was finally losing momentum. However, by London's opening the greenback
was already recovering yesterday.
"The dollar didn't behave as anticipated in an environment of emerging
market concerns," said ING Barings senior economist Daragh Maher.
"But it's been pretty short-lived. It's hard to make a compelling
argument against the dollar . . . just because things look so terrible
elsewhere."
Other Asian currencies mostly ignored the yen's jump below the 125
level, as countries such as Singapore warned of further economic malaise in
the second half.
The Singapore dollar spiked to near 1.84 before closing at 1.8398
against the greenback, the peso slipped to 53.08, the baht to 45.59, the
rupiah to 11,355 and the Australian dollar to 50.48 US cents. The Taiwan
dollar finished slightly stronger, to 34.976, after a sharp six-day slide
and the won ended at 1,300.7.
With the region's largest economy stalled and the United States unable
to feed Asia's export boom, few expect any short-term improvement. Many
warned the fixed exchanges of Malaysia and China were also vulnerable to
adjustment.
Yesterday the Monetary Authority of Singapore announced a switch to
"neutral" from a "moderately tight" stance on its managed currency float.
While most expected an effective devaluation, the frankness of an official
change in policy underlined the challenges facing Singapore's
export-dependent economy.
Taiwan is also expected to widen its trading ban as it may be the next
Asian Tiger to slip into recession.
Most economists paint a scenario of Asian currencies sliding to fresh
lows, potentially forcing countries such as Malaysia and China to devalue
their fixed exchange rates.
Barclay's Capital offered this year-end outlook against the dollar:
The yen at 130-135, the Singapore dollar at 1.90, the Korean won at 1,400
and Taiwan, "an accident waiting to happen", at 37 to 38.
SG Securities sees the yen at 130, the Taiwan dollar as low as 37 and
the Singapore dollar at 189.
"Malaysia will have a hard time withstanding further falls in the
Singapore dollar, which is already at an 11-year low," said one analyst.
Hong Kong dollar forwards are trading at a 100 basis point premium to
the spot rate, compared with par a week ago.
Bank of America sees the premium moving to 300 to 400 basis points
later this year as China comes under pressure to competitively devalue the
yuan.
Still, this scenario is not particularly kind to Hong Kong's property
outlook - with the fixed peg, its assets rather than its currency will take
the hit. The weakening yen regionals will hurt Hong Kong more than crises in
other currency board systems, such as Argentina's.
"In Hong Kong we're safe because we have a straight-jacket - there is
no room for any central banking to be conducted," said SG Securities
economist Steven Xu.
"The lesson of Argentina and elsewhere has underscored the further
need to enhance Hong Kong's political neutrality which means we have to make
sure the room to manoeuvre within [Hong Kong Monetary Authority] will be
extremely limited."
To unsubscribe from this group, send an email to:
realtraders-unsubscribe@xxxxxxxxxxxxxxx
Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
Attachment:
Description: ""
Attachment:
Description: ""
Attachment:
Description: ""
Attachment:
Description: ""
Attachment:
Description: ""
Attachment:
Description: ""
|