Asian banks intervene to slow highs
(27 April 2011 – Asia) Central banks in South Korea, Thailand and Malaysia intervened over Easter to slow a surge in their currencies in a broad Asian rally that carried the Singapore and Australian dollars to fresh highs against the US currency.
The People's Bank of China's (PBOC) decision to fix the yuan at a fresh high record against the US dollar added to optimistic views on Asian currencies, which have been trending upward as central banks around the region tighten monetary policies to fight rising inflation.
Many Asian countries have intervened in recent months to stem a decline in the US dollar, which could hurt their export industries.
The foreign exchange interventions by the Korean, Thai and Malaysian authorities yesterday appeared to be aimed at tempering gains in the won, baht and ringgit rather than an effort to stop the upward trend in those currencies.
Traders said they expect the PBOC to let the yuan rise further ahead of a 24 May US-China strategic economic dialogue in Beijing, since China has a record of yuan strengthening ahead of such international events.
The Singapore dollar also notched record highs, as the US currency fell to $S1.2400.
The Singapore currency's nearly year-long rally gained momentum last week when the island's central bank revalued the currency and pledged to continue to guide it higher to curb rising inflation.
Many Asian countries have intervened in recent months to stem a decline in the US dollar, which could hurt their export industries.
The foreign exchange interventions by the Korean, Thai and Malaysian authorities yesterday appeared to be aimed at tempering gains in the won, baht and ringgit rather than an effort to stop the upward trend in those currencies.
Traders said they expect the PBOC to let the yuan rise further ahead of a 24 May US-China strategic economic dialogue in Beijing, since China has a record of yuan strengthening ahead of such international events.
The Singapore dollar also notched record highs, as the US currency fell to $S1.2400.
The Singapore currency's nearly year-long rally gained momentum last week when the island's central bank revalued the currency and pledged to continue to guide it higher to curb rising inflation.
Subscribe