Asian Central Banks Act To Slow Rise Of Its Currencies

Source : Weekend TODAY, October 27, 2007

Asian central banks intervened yesterday to slow the ascent of their currencies against the US dollar, as the greenback continues to forge multi-year lows against many of the region’s currencies.

Fund flows to booming Asian markets, coupled with a weakening in the United States economy, are keeping the dollar on the defensive. Expectations that the Federal Reserve will again cut US interest rates next week, even as many Asian central banks remain hawkish, are widening the valuation gap between the dollar and its rivals in this region.

Singapore’s central bank bought US dollars yesterday after the greenback dropped to a 10-year low of $1.4523, traders said.

They estimate the trade-weighted Singapore dollar had risen to or above the upper limit of the undisclosed currency band maintained by the Monetary Authority of Singapore.