Asian currencies fell on Wednesday as news of a record slump in Taiwan's economy added to the region's woes, but the Chinese yuan rebounded after Beijing denied its officials had predicted a weaker currency. The South Korean won briefly fell to 1,475.8 per dollar, down 1.4 percent from Tuesday's domestic close to hit its weakest level in 10 weeks.
But the won later cut losses as local exporters rushed to sell dollars on the view that the unit may have been oversold. The won, Asia's worst performing currency, has lost 14 percent against the dollar so far this year following a 25 percent slide in 2008.
Meanwhile, the Indonesian rupiah fell about 0.9 percent to 12,100 per dollar, but its losses was limited by dollar-selling intervention by the central bank, traders said. Indonesia's central bank governor Boediono said on Wednesday that Bank Indonesia was prepared to use its ammunition to support the rupiah.
The rupiah is down just over 8 percent against the dollar so far this year, but the market still expects the currency to weaken further as the economy suffers in the global downturn. The rupiah in one-year offshore non-deliverable forwards was quoted at 14,850 per dollar on Wednesday, implying a sharp drop of 19 percent from the spot rate.
The Taiwan dollar barely moved at 34.64 per US dollar after sources told Reuters the island's economy shank at a record pace of more than 8 percent in the fourth quarter as exports collapsed. Nevertheless, the news reinforced investors' concerns about the region's economic outlook and a global recession.
The Philippine peso hit a two-month low at 47.95 per dollar, as traders fretted that the central bank could step in the market to defend the key 48 level. "I think risk aversion is still the sentiment," said a trader in Manila. "However, the move might be tempered by intervention and profit taking."
The yuan in the offshore one-year non-deliverable forwards rose to 6.95 per dollar after the Chinese government denied a magazine report, which quoted senior officials suggesting the yuan might depreciate. The forwards slipped to 7 on Tuesday after the China Briefing magazine cited Zhang Xiaoqiang, deputy head of the National Development and Reform Commission, as saying the yuan might drop to around 6.95-7 per dollar because of a weak Chinese economy.
The spot yuan edged up to 6.8370 per dollar. On Wednesday, the magazine quoted Liu Mingkang, head of the China Banking Regulatory Commission, as saying the Chinese currency could slip to about 6.9-7. But the authorities denied both reports on Wednesday and the magazine later retracted the comments, saying they have been wrongly attributed to the two officials.
The denial briefly lifted the Singapore dollar, which rose 1.5266 per US dollar but later eased to 1.5280 amid concerns about the city state's economy. The Singapore dollar and Malaysian ringgit, which have closer correlations with the Chinese yuan, extended losses later on Tuesday following the magazine report.
Comments
Comments are closed.