May 30, 2012 / 7:07 AM / in 6 years

EM ASIA FX-Spain banks woes hit; rupiah, peso fall

* Month-end corp dlr demand, foreign banks hit rupiah
    * Philippine peso down on fixing-linked dlr bids, specs
    * Baht at 4-mth low on gold importers; 31.92/dlr seen
    * S.Korean exporters relive won

 (Adds details, updates prices)	
    By Jongwoo Cheon	
    SINGAPORE, May 30 (Reuters) - Emerging Asian currencies
slipped on Wednesday as investors cut back on risky assets on
escalating worries about Spain's banking sector, while Bank
Indonesia's move to support the ailing rupiah along with
intervention failed to arrest its slide.	
    Risk worries also restrained the peso's gains after
Tuesday's rating outlook upgrade by Moody's Investors Service as
interbank speculators continues to sell the currency and on
fixing-related dollar demand.	
    "When we have such a strong USD thrust in the market, it is
unclear where the bottom (for emerging Asian currencies) is,"
said Sacha Tihanyi, senior currency strategist at Scotia Capital
in Hong Kong.	
    "Of course the worst case scenario can be compared with
2008-2009. If that is the benchmark then there is much scope yet
for depreciation in Asia ex-Japan," Tihanyi added, referring to
the period of global financial crisis.	
    A government source told Reuters on Tuesday that Spain would
likely recapitalise Bankia, which asked for 19 billion
euros on Friday, by issuing new debt and possibly drawing cash
from the bank restructuring fund and Treasury reserves.
    The 10-year Spanish government bond yield hit a six-month
high on Tuesday, with the sell-off in the country's debt having
driven up their risk premium over safe haven German Bunds to
euro-era highs this week. 	
    That pushed the euro to a two-year low and dented
Asian shares on Wednesday. The Australian dollar fell
after weaker-than-expected retail sales. 	
    China is seen also taking cautious steps on stimulus to
boost the world's second-largest economy.	
    Beijing needs to bolster investment to spur economic growth
but it should shun aggressive fiscal stimulus, influential
academics said in leading state-backed newspaper.
    "Path of least resistance for USD/Asia FX we think is still
up given that the risk appetite decline has grown pervasive,"
said Emmanuel Ng, foreign exchange strategist at OCBC Bank in
    Separately, the bank said in a note: "Alarm towards EM
markets continues to mount with risk premiums blowing out and
(we) expect potential USD strength to remain very much a
dominant feature in the near-term."	
    Dollar/rupiah leapt on month-end demand from
Indonesian corporations and foreign banks' dollar bids, dealers
    The pair's indicative price rose 1.8 percent to 9,550, but
market prices were higher with some quotes above 9,600,
according to dealers.	
    The central bank has been spotted selling the pair from
9,420 to 9,580 to select banks, dealers said. Bank Indonesia's
intervention may calm the rupiah market, some dealers said.	
    "The central bank keeps supplying USD and it is estimated to
inject $500 million-$600 million a day recently. Quite a bit of
the USD demand has been met by now," said a Jakarta-based
    "Demand by foreign banks is still there but it is slowing
down a bit," the dealer added.	
    But investors did not expect an immediate remedy for the
rupiah from the central bank's plan of dollar term deposits in
short term. 	
    Another trader in Jakarta said rates offered for the
deposits must be higher than market rates to be effective.	
    On Tuesday, Bank Indonesia said the rates will be as
competitive as market rates.	
    Dollar/peso rose on fixing-related demand from
foreign banks and as interbank speculators bought the pair,
dealers said.	
    On Tuesday, the pair slid to as low as 43.205 on stop-loss
selling after Moody's upgraded Philippine sovereign rating
    "The 43.205 was a bit excessive with global worries still
present," said a European bank dealer in Manila.	
    The dealer expected dollar/peso to move between 43.300 and
    The pair is seen having technical resistance at 43.475, the
tenkan line, as it ended below the line on Monday. Dollar/peso
had been closing local trade above that since May 9.	
    Dollar/baht hit its highest in more than four months on
demand from gold related investors and interbank players,
dealers said.	
    The pair rose to 31.815, the highest since Jan. 18. The pair
may rise further, probably to 31.920, the high of Jan. 16, as
worries about Spain's borrowing costs are likely to keep denting
risk appetite.	
    But that level may be a strong technical resistance,
analysts said.	
    If the resistance is cleared, dollar/baht may head to 32.11,
the 38.2 percent Fibonacci retracement of its 2009-2010 slide.	
    Dollar/won rose on persistent worries about the
Spanish banking sector, but South Korean exporters limited its
    Exporters' dollar sales for month-end settlements prevented
offshore funds and local interbank players from chasing up the
    "Despite a weaker euro and sluggish stocks, it is difficult
to expect a big jump," said a senior foreign bank dealer in
    He added exporters will be more aggressive above 1,180 and
investors need to also be cautious over possible dollar-selling
intervention by the foreign exchange authorities.	
    U.S. dollar/Singapore dollar edged up, but European
investors and leveraged funds sold the pair on rallies.	
    Investors stayed also cautious over possible intervention by
the Monetary Authority of Singapore to cap 1.2800.	
    But month-end demand from Singapore corporations and risk
aversion continued to support the pair.	
  Change on the day at 0630 GMT	
  Japan yen        79.44          79.49       +0.06
  Sing dlr        1.2791         1.2782       -0.07
  Taiwan dlr      29.697         29.645       -0.18
  Korean won     1176.71        1174.80       -0.16
  Baht             31.78          31.71       -0.22
  Peso             43.45          43.22       -0.53
  Rupiah         9550.00        9380.00       -1.78
  Rupee            56.07          55.67       -0.70
  Ringgit         3.1570         3.1570       +0.00
  Yuan            6.3543         6.3480       -0.10
  Change so far in 2012
  Currency    Latest bid  End prev year    Pct Move
  Japan yen        79.44          76.92       -3.17
  Sing dlr        1.2791         1.2969       +1.39
  Taiwan dlr      29.697         30.290       +2.00
  Korean won     1176.71        1151.80       -2.12
  Baht             31.78          31.55       -0.72
  Peso             43.45          43.84       +0.90
  Rupiah         9550.00        9060.00       -5.13
  Rupee            56.07          53.08       -5.32
  Ringgit         3.1570         3.1685       +0.36
  Yuan            6.3543         6.2940       -0.95
 (Additional reporting by Reuters FX Analyst Krishna Kumar in
SYDNEY and IFR Markets' Catherine Tan; Editing by Ramya
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