Asian currencies shrug off North Korea

10 Jul, 2006

Asian currencies largely shrugged off jitters following North Korea's missile launch last week, with generally bullish markets focussing on the prospect of a European Central Bank lending rate rise.
JAPANESE YEN: The yen bounced back against the dollar in the past week with market players looking for clues to whether the US Federal Reserve would continue raising interest rates, dealers said.
The Japanese currency stood at 113.99 to the dollar late Friday in New York, up from 114.65-67 to the dollar a week earlier.
It climbed up from the mid-115 level touched in midweek amid geopolitical concerns following North Korea's firing of missiles and prospects that the European Central Bank will raise its benchmark lending rate in August.
After Tokyo's main trading hours on Friday, the US Labour Department announced a weaker-than-expected report on non-farm payrolls.
The US economy added 121,000 jobs in June, the department said, fewer than the 175,000 widely forecast by Wall Street economists and analysts.
The weak job growth gave traders evidence of an economic slowdown that could ease inflation pressures. This in turn could reduce pressure on the Federal Reserve to raise interest rates, giving the yen support against the dollar based on the outlook of narrowing interest rate differentials.
But Kathy Lien at Forex Capital Markets said the data on closer inspection were not as weak as the headline suggested.
AUSTRALIAN DOLLAR: The Australian dollar is expected to gain strength against the greenback in the coming week after bullish comments by the European Central Bank (ECB), dealers said.
At 5:00pm on Friday (0700 GMT), the dollar was trading at 74.83 US cents, well up on the previous week's 74.29 US cents.
Ozforex manager of corporate business Jim Vrondas said the Australian unit had been helped by comments from the ECB on Thursday.
"At the moment the focus is on global interest rates ... obviously the ECB's comments were bullish for the euro and helped the Aussie as well," he said.
Vrondas said the Australian dollar was likely to continue higher and could break up through 75 US cents.
"We feel as though the US dollar's going to stay weaker," he said.
In the coming week, the domestic focus will on June labour force data to be released on Thursday, and a speech by Reserve Bank of Australia deputy governor Glenn Stevens on monetary policy on the same day.
NEW ZEALAND DOLLAR: The New Zealand dollar ended the week at 60.40 US cents, down from 60.88 the previous Friday.
The kiwi edged up to over 61 US cents earlier in the week but dropped on Thursday after it failed to break resistance at 61.20, eventually collapsing under the weight of a strengthening US dollar.
CHINESE YUAN: The yuan finished over-the-counter (OTC) foreign exchange trading at 7.9859 to the dollar Friday, after trading between 7.9850-7.9968, traders said.
The intraday high of 7.9850 was the strongest level for the yuan since it was revalued by 2.1 percent in July 2005.
The currency closed on Thursday at 7.9925.
The yuan ended at 7.9866 to the dollar earlier Friday on the exchange-traded market, against 7.9920 on Thursday.
Friday's central parity rate for the yuan was set at 7.9936 to the dollar before the start of trading, compared with 7.9960 Thursday.
The central bank allows a yuan-dollar trading band of 0.3 percent on either side of the midpoint.
HONG KONG DOLLAR: The US-dollar pegged Hong Kong dollar closed the week at 7.7693 from the previous week's close of 7.7673.
INDONESIAN RUPIAH: The rupiah ended the week stronger at 9,075-9,090 to the dollar on Friday, compared to the previous week's close of 9,260-9,270 to the dollar.
PHILIPPINE PESO: The Philippine peso rose to 52.35 to the dollar on Friday afternoon from 53.110 on June 30.
SINGAPORE DOLLAR: The dollar was at 1.5794 Singapore dollars on Friday from 1.5890 the previous week.
SOUTH KOREAN WON: The won closed at 947.60 won per dollar Friday, compared with 948.90 won a week earlier.
The dollar fell 1.90 won on Friday as jitters over North Korea's missile launch eased and the greenback weakened against the yen and the euro.
Dealers said the dollar-won exchange rate is expected to move between 942 and 951 won when the market reopens on Monday.
TAIWAN DOLLAR: The Taiwan dollar closed at 32.397 against the US dollar compared with 32.399 a week earlier.
THAI BAHT: The Thai baht rose against the dollar over the past week in line with regional currencies, dealers said.
The Thai unit closed Friday at 37.98-38.03 baht to one dollar compared to the previous week's close of 38.16-19.

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