Asian units soar against US dollar

AP and AFP

BERLIN/TOKYO, Several Asian currencies soared against the U.S. dollar Tuesday as a rally by regional shares rekindled risk appetite and interest in the units, dealers said. The New Taiwan dollar and Malaysian ringgit struck highs not seen since the Asian financial crisis in 1997, while South Korea’s won was at its strongest for two-and-a-half years. The rallies among regional units came as analysts said they expect central banks this year to adopt a strategy of keeping their currencies strong and interest rates high in order to tame inflation, a growing problem in Asia. “The final tool in the armory of the region’s authorities is forex appreciation,” Fiona Lake, a Goldman Sachs analyst, wrote in a research note. In afternoon Asian trade, the U.S. dollar fell to 1,104.32 Korean won from 1,107.35, to NT$28.91 from NT$28.98 and to 8,915.50 Indonesian rupiah from 8,975.25. The euro bought US$1.3622, up from US$1.3581 in New York late Monday. Against the Japanese unit, the common currency rose to 112.07 from 111.78. The U.S. dollar edged down to 82.26 yen from 82.32 yen. Against other Asian currencies the U.S. dollar fell to SG$1.2724 from SG$1.2751 on Monday and to 30.70 Thai baht from 30.82, while it also dropped to 43.45 Philippine pesos from 43.67. The euro fell on Monday after data showed German industrial orders tumbled 3.4 percent in December, much worse than forecasts for a drop of 1.5 percent. The euro is higher against the dollar, regaining some ground lost after Germany reported weaker-than-expected manufacturing data. The 17-nation euro bought US$1.3634 in morning European trading Tuesday, up from US$1.3591 late the day before in New York. The British pound is up slightly to US$1.6153 from US$1.6121, while the dollar is down to 82.09 Japanese yen from 82.29 yen. The dollar had gained traction Monday after Germany, Europe’s largest economy, reported that factory orders fell an unexpectedly sharp 3.4 percent in December. Traders were looking ahead to Germany’s release later Tuesday of industrial production figures for further guidance. “Profit taking (on the euro) emerged after the German data overseas, which then triggered short covering in Tokyo,” said Yusuke Fujishima, dealer at Mitsubishi UFJ Trust and Banking. Besides the technical buy-backs, two dealers cited rumours that Asian central banks were buying the euro. One dealer said he had heard the banks were converting their dollars from intervention operations to limit gains in their currencies, according to Dow Jones Newswires. However, the U.S. dollar was being supported by higher yields on U.S. Treasury bonds amid expectations for a recovery in the world’s largest economy, dealers said. Investors were also reassessing the prospect of rate hikes in the eurozone, which had boosted the single currency in recent weeks.