Asian currencies ended the week mainly lower against the dollar, with the yen in particular expected to weaken further amid a gloomy outlook for the economy.
JAPANESE YEN: The yen slipped to its lowest level in three and a half months against the dollar amid negative prospects for Japan's economic recovery, as the currency's "safe haven" status was called in question. The yen stood at 97.87 against the dollar on late Friday, down from 94.09 against the dollar a week earlier. It went as low as 98.61 against the dollar.
The government announced on Friday that the country's industrial output plunged a record 10.0 percent in January from the previous month as companies slashed production to cope with the recession.
But the figure was in line with market expectations and it led market players to lock in the dollar's gains against the yen in recent weeks.
Kathy Lien at Forex Global Trading said she expected the yen's downward trend to resume. She said Japan's heavy dependence on exports has left its economy vulnerable even though it was not as exposed to risky investments as other economies.
"The irony is that the country was not widely implicated in the holding of the toxic assets that destroyed years of financial progress," Lien said. "Instead, their dependence on the health of the rest of the world has brought them to their knees."
The US economy contracted a stronger-than-expected 6.2 percent in the fourth quarter, the Commerce Department said on Friday. "A US economic downturn is usually a dollar-selling factor. But in recent foreign exchange trading, it tends to be associated with declines in Japanese and European exports," the Nikkei Quick News reported.
AUSTRALIAN DOLLAR: The Australian dollar was likely to trade in a tight range next week, with weak US data and an expected cut to the official cash rate to weigh on the currency, dealers said. The Australian dollar closed on Friday at 64.58 US cents, up from the previous week's close of 63.86 cents.
Westpac currency strategist Andrew Hanlen said the currency had been buoyed by surprisingly strong capital expenditure data, which had dampened expectations of a large cut to the cash rate by the central bank Tuesday.
"We actually think they will cut rates by 25 basis points," Hanlen told AFP.
But Hanlen said the upside trend was likely to be fairly short-lived, with the Australian dollar likely to "outperform and grind lower over the year."
Key December quarter GDP data from the US and the cash rate announcement were likely to drive the dollar generally downwards, said ANZ economist Amber Rabinov. "The cash rate and GDP announcements next week will keep the market on its toes," said Rabinov. "Tight range trading has persisted, with the Australian dollar grinding higher off a base around 63.50 US cents."
A ceiling had formed around 65.50 cents, said Rabinov, with downside support at 66.20 cents. "The Australian dollar is likely to remain weak as long as global growth and commodity prices remain poor," added Shane Oliver, AMP Capital economist. "The near term risk is on the downside."
NEW ZEALAND DOLLAR: The New Zealand dollar ended the week at 50.56 US cents, up from 50.36 cents the previous week. "We have found relatively solid support around US50.50c all this week," said BNZ currency strategist Danica Hampton. There is little imminent on the New Zealand economic calendar, leaving the kiwi dollar to be affected by looming central bank decisions in Europe and Australia and non-farm payroll data in the US. "The kiwi is just going to be vented around with global sentiment," she Hampton said.
CHINESE YUAN: On the over-the-counter market, it ended at 6.8403 Friday to the dollar, compared with Thursday's finish of 6.8400, and a closing price of 6.8372 to the dollar the week before. The central bank had set the yuan central parity rate at 6.8379 to the dollar Friday, compared with 6.8371 on Thursday.
The People's Bank of China allows a trading band of 0.5 percent on either side of the midpoint.
HONG KONG DOLLAR: The US-pegged Hong Kong unit was at 7.7538 to the dollar, from 7.755 a week earlier.
INDONESIAN RUPIAH: The rupiah ended at 12,110 to the dollar, down from 12,100 the week before.
PHILIPPINE PESO: The Philippines peso fell to 48.800 to the dollar on Friday afternoon from 48.300 on February 20.
SINGAPOREAN DOLLAR: The Singapore dollar was at 1.5461 to the US dollar from 1.5384 the previous week.
SOUTH KOREAN WON: The won sharply fell to 1,534.00 won per dollar Friday, its lowest level in almost 11 years, from 1,506.50 won a week earlier, because of global jitters and concerns over nuclear-armed North Korea's apparently imminent long-range missile test. Dealers said the won was likely to weaken further in March because of dollar demand for stock dividends for foreigners.
But the Ministry of Strategy and Finance and the central Bank of Korea on Thursday said the possibility of the country facing a foreign exchange liquidity crisis is "extremely thin." They forecast a 13 billion dollar current account surplus this year, compared to a 6.41 billion dollar deficit in 2008, because imports are falling and fewer people are travelling abroad due to the economic slump.
South Korea has reached currency swap deals wwith the United States, China and Japan totalling 90 billion dollars to bolster its foreign currency reserves now standing at 201.7 billion dollars, they said.
TAIWAN DOLLAR: The Taiwan dollar fell 0.41 percent to finish the week at 34.950 against the US dollar, against 34.808 a week earlier.
THAI BAHT: The Thai baht hit a two-year low against the dollar, mainly in line with the weakness of regional currencies against the greenback amid active trading, a dealer said. Thai Finance Minister Korn Chatikavanij commented that the weak baht could boost the ailing Thai exports sector. The Thai unit closed Friday at 36.15-17 baht to one dollar compared to last week's close of 35.71-73.
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