Asian currencies ended the week mixed against the US dollar, with the yen tumbling to a 4.5-year low on interest rate differentials but the Australian dollar soaring to an 18-year high.
JAPANESE YEN: The yen tumbled to its lowest level against the dollar in four and a half years, as Japan was seen in no rush to raise its extremely low interest rates and market players favoured high-yielding currencies.
The Japanese currency stood at 124.06-08 to the dollar late Friday, down from 123.30-32 to the dollar a week earlier. It fetched 124.14 at one point on Friday, its lowest level since December 2002.
"Trading tends to be based on differences in interest rates," said Chuo Mitsui Trust Bank forex chief Yosuke Hosokawa said. "Since the Bank of Japan is unlikely to take an immediate step to raise its interest rate, yen-selling sentiment is likely to continue for now."
Foreign exchange trading is expected to make "nervous moves focusing on US long-term interest rates" ahead of the US Federal Open Market Committee meeting at mid-week, the business daily Nikkei's Internet edition said Friday.
There were expectations that the meeting would forgo any rate increase. The yen would go still lower, possibly to the 125 level, if a statement accompanying the FOMC meeting would give "upward pressure" to US long-term rates, the Nikkei said.
AUSTRALIAN DOLLAR: The Australian dollar is expected to gain against the greenback this week after hitting an 18-year-high at Friday's close.
The Aussie was trading at 84.79 US cents at 5:00 pm Friday, up more than a cent on the previous week's 83.73 US cents and at its highest level in almost two decades.
AMP Capital Investors chief economist Shane Oliver said the currency was poised to rise further on the back of strong commodity prices.
"The path of least resistance for the Australian dollar is still up, probably to the February 1989 high of 89.5 US cent," he said.
"Commodity prices are still running around levels more consistent with parity to the US dollar and the interest rate differential versus the US dollar is set to widen."
Macquarie Bank associate director of foreign exchange Joanne Masters said the Australian dollar was being boosted by investors chasing higher yields through carry trade.
A carry trade is where investors borrow low-yielding currencies, such as the Japanese yen, and lend high-yielding ones, such as the Australian dollar.
Masters said carry trades tended to become prominent when there was global financial and exchange rate stability.
NEWZEALAND DOLLAR: The New Zealand dollar ended the week at 75.39 US cents, up slightly from 75.25 the previous Friday.
Dealers said the central bank had intervened in the foreign exchange market for a second time on Monday to sell the kiwi. It had intervened on the previous Friday for the first time since the dollar was floated in 1985, saying it was "exceptionally and unjustifiably high".
The central bank succeeded in driving down the currency about a cent after it reached a post-float high of 76.40 US cents. But the impact did not last, with the kiwi reaching another post-float record of 76.58 US cents late Thursday.
The dollar also reached a post-float high on Friday against the trade weighted index (TWI), a basket of currencies of New Zealand's trading partners including the United States, Europe, Japan, Britain and Australia.
CHINESE YUAN: The yuan closed at 7.6213 to the dollar Friday on the exchange-traded market, compared with Thursday's close of 7.6190, and a closing price of 7.6242 to the dollar the week before. On the over-the-counter market, it ended at 7.6207 to the dollar against 7.6188 the previous day.
The central bank had set the yuan central parity rate at 7.6224 to the dollar Friday, compared with 7.6208 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 dollar ended the week at 7.813, from 7.817 a week earlier.
INDONESIAN RUPIAH: The rupiah ended the week trading at 9,000/0005 to the greenback as compared with 9,043/9,048 a week earlier.
PHILIPPINE PESO: The Philippine peso was at 46.06 to the dollar on Friday, compared to 46.39 on June 15.
SINGAPORE DOLLAR: The Singapore dollar was at 1.5374 to the US dollar from 1.5412 the week before.
SOUTH KOREAN WON: The won closed at 928.0 won to the dollar on Friday, up slightly as compared with 928.50 won a week earlier. Dealers said the dollar-won rate might test the 930-won level in the coming week if the stock market were to continue with a recent correction.
US private equity fund Lone Star sold part of its stake in Korea Exchange Bank for 1.3 billion dollars last week and the proceeds from this sale were also expected to help boost the greenback against the won, they said.
TAIWAN DOLLAR: The Taiwan dollar rose 1.23 percent to finish the week at 32.736 to the US dollar, as compared with 33.142 a week earlier.
THAI BAHT: The Thai baht remained stable against the dollar over the past week as investors adopted a wait-and-see attitude ahead of a weekend protest against the kingdom's army-installed government, dealers said. The Thai unit closed at 34.59-60 to the dollar on Friday, marginally up from 34.65-66 a week earlier.
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