Short-term US dollar funding rates in Asia remained steady even as news of the biggest bank failure in the United States and stalled negotiations over the government's bailout plan for credit markets raised fresh nervousness. Overnight dollar funds remained in a broad 2.5-3.5 percent range in Asia as major central banks kept up a steady supply of cash to the nervous markets.
"Market is going 2 to 3 percent," said a trader in Singapore, adding most deals were however taking place between 2.4 and 2.9 percent. But traders also were surprised that the possibility the US government's $700 billion bailout package may be delayed or scuppered was not having a bigger impact.
"I think the market is just frozen at the moment. But it is somewhat of a paradox as Dow futures are down 135 points," said Claudio Piron, a strategist at J.P. Morgan Chase Bank. Meanwhile, short-term lending rates in local currencies were higher.
Traders said there was pressure to cover funding positions ahead of the numerous holidays across the region next week. Singapore dollar overnight rates were at 2 percent, their highest since end-January. In Indonesia, overnight rates were between 9.3 and 9.6 percent, compared with an average 9.496 on Thursday.