The Thai baht fell for a third straight day on Thursday on concerns that protesters might escalate their campaign to throw out Prime Minister Thaksin Shinawatra.
The South Korean won softened to a one-week low of 975.6 per dollar in anticipation of dollar buying by US private equity firm Lonestar after it completed its sale of Korea Exchange Bank to South Korea's Kookmin Bank.
The Malaysian ringgit and Indonesian rupiah stalled after gains earlier this week, as markets worried that the respective central banks viewed sharp gains as unwelcome.
Other Asian currencies were little changed as traders waited for a clearer outlook on US interest rates and for whether China would let the yuan strengthen at a faster pace in the face of pressure from US politicians.
The baht fell as low as 39.09 per dollar, the lowest level in almost a week and down 0.4 percent from late Asian trading on Wednesday. The decline accelerated after a breach of 38.95 triggered automatic stop-loss orders.
The baht has come under pressure as Thaksin refused to accede to opposition demands he step down ahead of the April 2 general elections. Thaksin called the polls to stem protests against his family's tax-free sale of a controlling stake in Thai telecommunications company, Shin Corp.
"The closer it gets to the elections, the tighter the political situation is going to be," said a baht dealer in Bangkok. "The leader of the protests has said he will escalate the protests if Thaksin doesn't quit. People don't know what's going to happen next."
Thailand's army chief said that he saw no immediate need for a state of emergency because the street campaign, which at one point drew almost 100,000 people, has remained peaceful.
The baht has also come under pressure from repatriation of dividends by foreign investors holding Thai shares, some dealers said. The outflows could be offset by possible inflows related to an open offer by India's Tata Steel to buy the remaining shareholders of Thailand's Millennium Steel, they said.
The rupiah retraced from a 15-month high of 9,060 per dollar hit on Wednesday, and traders cited dollar-buying intervention by state-run banks earlier this week as a sign the central bank wanted to stall the currency's sharp gains.
The rupiah has gained more than 8 percent this year, making it Asia's best performing currency, as foreign investors chased some of Asia's highest-yielding bonds and bought stocks, driving the benchmark stock index to record highs this week.
"State banks have been buying dollars heavily in the last couple of days," said a Jakarta-based currency dealer. "It could be because of the recent strength of the rupiah. Foreigners have been buying a lot of rupiah."
Indonesian central bank officials have voiced concerns about speculative funds, or hot money, inflows into the country. They are worried that domestic financial markets and the economy could suffer a shock when such capital moved out of the country.
State bank dollar-buying was also noted in India, where the rupee fell to a two-week low of 44.577 per dollar.
The ringgit steadied after setting a new 8-year high of 3.6885 per dollar. The ringgit had risen almost 1 percent in two weeks amid talk that the central bank preferred a stronger currency to stem inflationary pressures.
But a central bank report, published late on Wednesday, threw cold water on those expectations as Bank Negara said it would not use the currency as a monetary policy tool. Moreover, Bank Negara said it would intervene to smooth out the currency's sharp moves.
Comments
Comments are closed.