EMERGING CURRENCIES
Asia currencies down as US rate view props up dollar
By Melissa Chia
Reuters
First Posted 17:06:00 04/24/2008
Filed Under: Economy, Business & Finance,Foreign Exchange Markets
SINGAPORE -- The Singapore dollar retreated from a record high on Thursday while the Thai baht fell half a percent as the dollar gained broad support from the view that US monetary easing may be nearing an end.
In addition, the dollar found support against the euro from European policy makers expressing concern over the volatile euro. The dollar rallied against the kiwi after New Zealand's central bank kept rates steady and softened its language over the outlook for rates.
"I sense a general relief that the market believes that the worst may be over for the US financial sector," said Philip Wee, a strategist at DBS Bank.
"While no one is prepared to declare the crisis over yet, they appear to be shifting from commodities into equities again. Given that the US dollar-selling was linked to the crisis, that appears to be unravelling too," he said.
Financial markets are coming to the view that the Federal Reserve was likely to cut rates by 25 basis points at its meeting next week but may be ready to take a break after that.
The Thai baht fell by 0.5 percent to 31.57 as investors pursued the dollar in Asia.
The South Korean won initially rose 0.4 percent to 988.7 per dollar in early trading to hit a one-week high as investors bought local shares.
It later fell to 996.60, 0.4 percent below its previous close. The currency has fallen 2.0 percent in the past two weeks.
The Singapore dollar fell 0.6 percent to 1.3551 per US dollar, after peaking at a record high of 1.3468 in the previous session.
Singapore-based traders said local reports citing concerns about the impact of the strengthening currency on exports should partly staunch the upward pressure on the Singapore dollar. The currency has gained 6.3 percent so far this year.
However, analysts said data on Wednesday showing Singapore inflation in March hit a 26-year high of 6.7 percent would pressure the central bank to allow faster appreciation of the currency.
"While players see things stabilizing in the US, they also see policy challenges emerging for many central banks in Asia in their struggle against inflation," Wee said.
|
