October 3, 2011Asian Currencies Under Pressure
Tokyo, Asian currencies were under pressure on Tuesday in Asia amid the continuing European sovereign debt crisis and concerns over a global economic slowdown, prompting some regional currency authorities, according to traders, to defend their own currencies.
Korean and Malaysian central banks were suspected to have intervened in the currency market, buying their own currencies against the dollar above 1,200.00 won and at 3.2130 Malaysian ringitts, respectively, traders said. The greenback is at 1,205.80 won and 3.2266 ringitts as of 10:50am local time.
The Australian dollar sank to a fresh 12-month low of $0.9472 despite impressive building approvals and trade data for August released earlier in the day. It was also weaker against its Japanese counterpart, as it stood at ¥73.09, down from ¥73.25 in New York on Monday.
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Analysts said a factor behind these declines is the intensifying concerns over European debt problems and the global economic outlook.
"The Australian dollar is being driven by offshore markets which are dismal," said Sean Callow, currency strategist at Westpac.
On Monday, investors' concerns over a Greek default have increased after European officials said that they have chosen to delay a much-awaited decision on the next Greek bailout money.
A decision on the next tranche was supposed to have been taken at an October 13 special meeting, but euro-group President Jean-Claude Juncker said that meeting has been cancelled.
A senior euro-zone official said the decision on the next tranche is now likely to be taken at the October 17 summit of European Union leaders.
Greece, which missed its budget deficit target for this year, is negotiating new austerity measures with its creditors to receive an €8 billion part of a bailout loan agreed last year.
The euro was at $1.3212 as of 10:50am local time, from $1.3175 late on Monday in New York and was at ¥101.35, from ¥100.96. Traders said the euro recouped some of its losses in Asia, but that's mostly due to position adjustments, meaning they speculate that the euro will resume falling against its main rivals soon.
In fact, Japan's Finance Minister Jun Azumi sent a fresh warning signal to currency investors, saying the recent moves in the euro against the yen are excessive.
"The current euro rate against the yen is too extreme," he said in a press conference on Tuesday.
The dollar, meanwhile, was at ¥76.72 from ¥76.63 and the ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 79.507 from 78.965.
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