Dollar Tumbles on Upbeat Stock Markets
The dollar was heavily sold across the board in Asian trade on Thursday as upbeat stock markets gave investors a renewed appetite for risk, dealers said.
As equity markets around the globe rebounded from big losses earlier in the week caused by Standard & Poor's outlook downgrade for U.S debt dealer sentiment also rose, although Washington's debt problems also played at role.
Against riskier assets, the dollar hit a 31-month low of 1,080.50 South Korean won, against 1,082.20 on Wednesday, and plunged to a 13-year low against the Malaysian ringgit, fetching 3.0080 from Wednesday's 3.0140.
It also fell to Sg$1.2368 from Sg$1.2416.
"The dollar is broadly under selling pressure," said Tohru Sasaki, strategist at JPMorgan Chase Bank in Tokyo.
"Investors' risk appetite is increasing on the back of brisk gains in stock markets amid growing expectation for economic recovery," Sasaki said.
"Investors are selling the dollar and the yen to finance investment" in riskier assets with higher returns.
The greenback eased to 82.23 yen in Tokyo afternoon trade from 82.54 in New York late Wednesday.
The euro rose to $1.4568 from $1.4519. The single European currency was rangebound at 119.81 yen against 119.83.
Emerging economy currencies have been rising strongly over the past year as foreign dealers seek out better returns on their investments than in the West, where the recovery from the global downturn is still slow and interest rates a lower.
The huge inflows of overseas cash have led to reports of central banks in the region intervening in forex markets to stop their currencies from becoming too strong and hurting their key export sectors.
The central banks of South Korea and Malaysia stepped into the markets for a second day in a row to staunch their currencies' rise, Dow Jones Newswires reported, while Thailand also intervened on Wednesday.
Global stock markets have been enjoying gains, with the Dow in New York closing near three-year highs Wednesday, on strong earnings reports that beat Wall Street expectations, particularly in the technology sector.
Lingering concerns over the U.S debt also hit the greenback after S&P warned it could cut Washington's AAA-rating on its sovereign debt.
"The market's focus is on the U.S debt problem, giving an additional blow to the greenback," Sasaki said.
Meanwhile, a smooth bond auction in Spain helped ease worries about the eurozone debt problem, dealers said. Spain has been caught up in renewed fears over sovereign debt levels, propelled by Portugal requesting a bailout April 6.
Although eurozone sovereign debt is a big concern for dealers, the euro has posted strong gains against the dollar since the European Central Bank raise interest rates.
A rate hike in the U.S does not seem likely soon and the Federal Reserve has said it will maintain a loose monetary policy until June, leaving huge amounts of dollars floating around the system.
The greenback also fell to Tw$28.90 from Tw$28.99, to 8,627.50 Indonesian rupiah from 8,662.50, to 43.17 Philippine pesos from 43.21 and to 29.92 Thai baht from 30.02.
Source: Agence France Presse
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