Dollar resurgence sends Asian currencies tumbling

08 Mar, 2004

Asian currencies fell across the board over the week as hopes of a recovery in the US economy sparked a resurgence of the US dollar.
The Japanese yen led the slide followed by the Australian dollar amid speculation that the greenback's recent freefall was bottoming out.
JAPANESE YEN: The yen continued sliding against the dollar during the week as market sentiment turned more positive on the outlook for the US economy, dealers said.
The Japanese currency stood at 111.32-34 to the dollar Friday afternoon, down from 109.46 the previous week.
"What is moving the market now is that sentiment has turned in favour of the dollar," said Kosuke Hanao, head of the foreign exchange division at RBS Securities Japan.
Expectations of continued Japanese intervention to stem the yen's rise also provided some support for the US unit against the Japanese yen, dealers said.
"With the market growing more and more optimistic about the US economy, the dollar is regaining ground and participants are selling the yen because of Japan's easy monetary policy," said Koji Fukaya, chief currency analyst at Bank of Tokyo Mitsubishi.
Japan spent 3.34 trillion yen (30 billion dollars) buying dollars in February following intervention of some 7.15 trillion yen in January to prevent the yen from strengthening.
AUSTRALIAN DOLLAR: The Australian dollar faces an uncertain week as speculation mounts that the currency has peaked against the greenback, dealers said.
While confident the Australian dollar would approach recent two-year highs exceeding 80 US cents in the next six months, dealers were less confident about the currency's short term direction.
It ended the week at 75.09 US cents, almost two cents down on the previous week's 77.07 US cents.
AMP Capital Investors chief economist Shane Oliver said the currency remains supported by strong commodity prices and a relatively wide Australia and US interest rate differential, with a domestic interest rate hike likely to spark a rally.
Oliver said it was premature to say the Australian dollar had peaked.
"I don't think it has had its peak, but then again, if you're looking for a peak it would look something like this," he said.
"Because we had a big spike up to 80 US cents, which was effectively resistance and it's sold off quite dramatically since then."
"There's still a reasonable chance that it will get back above the 80 US cents level before it starts heading down solidly."
NEW ZEALAND DOLLAR: The New Zealand dollar closed Friday worth 66.78 US cents, well down on the 68.73 cents close of a week earlier.
Toward the end of the week it consolidated ahead of key payrolls data out of the United States and despite comments by Finance Minister Michael Cullen.
SINGAPORE DOLLAR: The US dollar was at 1.7160 Singapore dollars on Friday from 1.7024 Singapore dollars the previous week.
HONG KONG DOLLAR: The US dollar-pegged Hong Kong currency traded at 7.7855 down from 7.7837 the previous week.
INDONESIAN RUPIAH: The rupiah closed the week weaker at 8,595/8,600 to the dollar compared with the previous week's close of 8,454-8,459.
PHILIPPINE PESO: The peso fell to near all-time lows at 56.345 in late trading Friday, compared to 56.305 a week earlier.
The peso fell to a record low of 56.35 to the dollars on February 20 amid political uncertainty ahead of the May 10 presidential election.
SOUTH KOREAN WON: The won strenthed to 1,172.70 to the dollar Friday, compared with 1,176.20 a week earlier.
TAIWAN DOLLAR: The Taiwan dollar shed 0.11 percent over the week to close at 33.401 against the greenback Friday. The currency closed at 33.365 the previous Friday.
THAI BAHT: The baht closed Friday at 39.53-55 baht to the dollar compared to the previous week's close of 39.25-27.

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