Asian currencies ended the week mixed against the dollar as concerns about subprime mortgages continued despite a US cut in interest rates and central bank intervention to increase liquidity in the banking system.
JAPANESE YEN: The yen lost ground against the dollar over the past week after a gloomy survey of Japanese business sentiment, dealers said. The Japanese currency stood at 112.46 to the dollar in late Tokyo trade on Friday, down from 111.27-32 a week earlier. "There is no incentive for investors to buy the yen at the moment," said Yuya Koike, a forex dealer at Hachijuni Bank. The Bank of Japan said confidence among major Japanese manufacturers fell for the first time in three-quarters in the three months to December.
The sentiment index for big manufacturers slid to 19 in December from 23 in September, missing forecasts for a figure of 21. "It's a sign that the impact of the subprime problems in the United States is spreading," said Hideaki Inoue, chief manager at forex trading for Mitsubishi UFJ Trust and Banking. Dealers meanwhile said the impact of Wednesday's quarter-point US interest rate cut on foreign exchange rates was limited, although the Fed action disappointed some investors who had been hoping for a bigger reduction.
The US Federal Reserve cut its benchmark fed funds rate by 25 basis points in a bid to help shore up stocks and the economy in the face of the ongoing fallout from the US subprime mortgage crisis.
The market also largely ignored a joint initiative by the central banks of the United States, the eurozone, Britain, Canada and Switzerland to jointly boost liquidity.
AUSTRALIAN DOLLAR: The Australian dollar ended the week at 88.10 cents, up slightly on the previous week's 87.85 US cents. The currency may experience some volatility in the coming week as investors fret about the impact of the global credit crunch, dealers said. St George Bank foreign exchange trading manager Stuart Moore said the Australian dollar gained after Thursday's announcement that central banks would act to address the credit crunch. But he said some investors were worried they were not going far enough. "I think the market is still nervous and I suppose needs to wait and see what actually happens," he said.
"I think volatility is going to continue over the Christmas and New Year period and I think the market is reluctant to accept that the measures are going to be a long-term thing." AMP Capital Investors chief economist Shane Oliver said the Aussie's fundamentals were sound and it was unlikely to suffer major losses.
NEW ZEALAND DOLLAR: The New Zealand dollar ended the week at 78.50 US cents, up from 77.82 the previous Friday. It is expected to rise next week as investors take heart from a plan by central banks to address the global credit crunch, dealers said. The kiwi benefited from Thursday's announcement that central banks were planning action to deal with the credit crunch arising from the sub-prime mortgage crisis, with dealers saying investors were becoming less risk adverse.
CHINESE YUAN: The yuan closed at 7.3710 to the dollar Friday on the exchange-traded market, compared with Thursday's close of 7.3669, and a closing price of 7.4004 to the dollar the week before. On the over-the-counter market, it ended at 7.3720 to the dollar against 7.3692 the previous day. The central bank had set the yuan central parity rate at 7.3589 to the dollar on Friday, compared with 7.3568 on Thursday. The People's Bank of China allows a trading band of 0.3 percent on either side of the midpoint.
HONG KONG: The Hong Kong dollar ended the week at 7.7986 to the dollar, compared to 7.797 a week earlier.
INDONESIA RUPIAH: The rupiah ended the week trading at 9,325/9,330 to the dollar, down from 9,267/9,278 to the greenback a week earlier.
PHILIPPINE PESO: The Philippine peso rose to 41.21 to the dollar on Friday afternoon compared to 41.74 on December 7.
SINGAPORE DOLLAR: The Singapore dollar was at 1.4444 to the dollar on Friday, up slightly from 1.4461 the week before.
SOUTH KOREAN WON: South Korea's won weakened to 930.10 won per dollar Friday, compared with 919.20 won a week earlier. The won slumped 5.10 won per dollar on Friday alone, as foreign investors dumped South Korean shares amid concerns over global credit market losses. A dealer with Shinhan Bank said jitters over China's rising inflation and the Moody's downgrading of credit ratings on Citigroup also cut the demand for the won.
TAIWAN DOLLAR: The Taiwan dollar closed the week at 32.376 against the US dollar down from 32.309 a week earlier.
THAI BAHT: The Thai baht slightly rose against the dollar over the past week as local exporters sold the greenback to adjust their positions, dealers said. The Thai unit closed at 33.60-61 to the dollar on Friday, up from 33.71-73 a week earlier.