Dollar Plunges Against Asian Currencies

[george]

Dollar plunges against Asian currencies

The U.S. dollar tumbled to its lowest rate in years against key Asian currencies Thursday after a top U.S. official indicated the government wouldn't intervene to halt the American currency's recent slide worldwide.

The dollar fell to a four-and-a-half-year low against the Japanese yen, and a seven-year low against the South Korean won. The trend continued as European markets opened, and the dollar fell to a new record low against the euro.

The euro surged to US$1.3074, breaking the record set on Wednesday, as concerns about high oil prices and the U.S. trade and budget deficits continued to push the dollar lower.

Analysts attributed Thursday's plunge to comments by U.S. Treasury Secretary John Snow in London on Wednesday, that "no one has ever devalued their way to prosperity" but the "only way to get prosperity is to follow the marketplace."

Snow said the United States favors a strong dollar, but his comments were still interpreted as ruling out official intervention in currency markets and renewed the markets' view that U.S. President George W. Bush's administration is happy to watch the dollar fall.

Some Asian officials have been worried the United States will start relying on a weak dollar to fight the ballooning American trade and budget deficits.

In Tokyo, the dollar fell late Thursday to 103.76 yen, its lowest level since April 2000, down 1.30 yen from late Wednesday.

On Thursday, several Japanese financial officials expressed concern about the dollar's moves, and the top government spokesman said Japan was ready to intervene as it has done in the past to prop up the dollar.

But traders now believe Japan probably won't intervene until the dollar falls below 103 yen.

"I'm concerned about foreign exchange levels and they need to be watched very closely," Japanese Finance Minister Sadakazu Tanigaki said.

Against the South Korean won, the dollar finished at 1,065.4 won, a seven-year low. It closed Wednesday's at 1,081.4 won.

Last week, the Bank of Korea said the won's gains were excessive and called for action, following a US$4 billion dollar-buying spree by the bank.

"We are thoroughly monitoring to prevent speculative engagement in our currency market," said South Korea's Minister of Finance and Economy, Lee Hun-Jai.

In Thailand, the dollar was trading at a six-and-a-half month low of 40.06 baht late Thursday, down from 40.21 baht at Wednesday's close, prompting officials there to eye intervention.

"It's our job to make sure that the baht doesn't swing so much that it affects trade. It's our duty to make sure that it's stable," Bank of Thailand Gov. Pridiyathorn Devakula said.

Pridiyathorn said interest rates rises would be kept in check so that demand in the property sector won't be affected, and the bank would also monitor short-term capital flows.

He didn't say when or whether the central bank might intervene, but foreign exchange dealers expect it to step in if the dollar dips below the psychological level of 40.00 baht.

--AP 2004-11-18

[marquess]

I wish the Aus$ would plummet. I has appreciated 30% against the Baht over the last two years.

[Crushdepth]

I wish the Aus$ would plummet. I has appreciated 30% against the Baht over the last two years.

<{POST_SNAPBACK}>

When I started here three years ago 1AUD was US$0.50 ! Grrrr....

[TRIPxCORE]

Australian Dollar along with that other commodity currency, the N.Z. Kiwi, are going to continue to strengthen. It is widely believed that most Asian currencies are under-valued. Especially Chinese Yuan. I follow currency situations very closely as I am an avid investor in foreign currency. All my money is in Euro's though.

[astral]

My guess is the Aussie $ has held its own,

it is the US$ that has slipped , and the Baht with it.

[usatrader]

It seems to a deliberate policy

EURUSD

It was only a matter of time that the euro would rally beyond its previous high of 1.3005. Today's surge higher was brought on by comments from US Treasury Secretary John Snow in London. He confirmed the market's worse fear, which was that the US government has no intentions of backing collaborative intervention. Although Snow reiterated the US' strong dollar policy, he said that the current account should be a "shared responsibility" and it will be something that the US will address. He also added that the "history of efforts to impose non-market valuation (or intervention) on currencies is at best unrewarding and checkered." Essentially, Snow, like his peers at the Federal Reserve have given the dollar the green light for further weakness. All that ECB officials have been able to do at this point is express their continued discontent. In our opinion, even though the ECB believes that intervention without the collaboration of the US will not be effective, we believe otherwise. If the ECB decides to intervene alone, it would send a strong message to the market that they are not willing to tolerate further euro strength and refuse to be at the whim of their neighbors across the Atlantic. With the euro at all time highs, the best benchmark is the USD/DEM. This is the first time since 1996 that the USD/DEM has fallen below the 1.50 level.

http://www.dailyfx.com/article_daily_funda...als_111704.html

[marquess]

Sadly the Baht has not been worth anything against anything, since 97. Also there have been a number of trading restictions placed on the Baht. Fortunately I have had what ever little I have had in Oz, thus I have benefited from the increase somewhat. Just shows you that when you invest here, your on to a loser. I wonder how long it will before we hear some minister talk about "boosting exports", and as a consequence more trading restrictions will be put in place?

[Ned]

With the imminent world economic meltdown approaching and the obvious signs of things going horribly wrong here in Thailand, I'm actually worried about what will happen to my funds in Oz......You people with the bulk of your money in baht have gotta be a tough pack of bastards!

[Ajarn]

In Thailand, the dollar was trading at a six-and-a-half month low of 40.06 baht late Thursday, down from 40.21 baht at Wednesday's close, prompting officials there to eye intervention.

"It's our job to make sure that the baht doesn't swing so much that it affects trade. It's our duty to make sure that it's stable," Bank of Thailand Gov. Pridiyathorn Devakula said.

They've already spent literally billions and billions of baht supporting the baht since Thaksin came to office, according to government reports....

[chuchok]

Great for Exporters and all the BG's in far away lands(Except for USA) sending money home.

[marquess]

I just wish they would let it float freely instead of unofficially linking it to the Dollar, in the real world world it should be about 38 now. They spend millions trying to stop it gaining, yet on the other hand they are dependent on imported oil, which would cost less if the Baht were slightly stronger. Enough to wipe out the expense of the subsidy.