Growing expectations that a fresh round of quantitative easing looms in the US and Singapore’s decision to tighten monetary policy sent the dollar to multiyear lows against several Asia-Pacific currencies.
Thursday’s demand for the currencies – which also contributed to a stock market rally – adds to the dilemma facing the region’s fast-growing economies, which face pressure to allow their currencies to appreciate and fear that surging inflows could destabilise their economies.
The dilemma stems from an intensifying dispute between the US and China, with the former calling for faster renminbi appreciation, and the latter blaming US monetary policy for potentially destabilising flows into emerging markets. The situation is set to be further complicated should the US move forward, as expected, with what has been dubbed QE2, which would release even more liquidity, much of which could end up in Asian emerging markets.
“It’s basically the dollar getting destroyed,” said Christian Carrillo, a strategist at Société Générale.
“这基本上是美元被逐渐摧毁的过程，”法国兴业银行(Société Générale)策略师克里斯蒂安•卡瑞罗(Christian Carrillo)表示。
The Reserve Bank of India has intervened in the foreign exchange market at least three times during the past fortnight to prevent the rupee appreciating against the dollar, including on Thursday, traders said.
交易商表示，过去两周里，印度央行(Reserve Bank of India)为防止印度卢比兑美元升值，已经至少三次干预汇市，其中包括周四的一次。
Duvvuri Subbarao, governor of the Reserve Bank of India, said in Washington last week that there were occasions when it might have to intervene in the foreign exchange market if capital flows disrupted the economy.
Most Asian central banks have been buying dollars to slow the rise of their currencies, dealers said. Intervention has added more than $250bn to Asian foreign exchange reserves during the past quarter, with about $120bn of that in September alone, according to BNP Paribas analysts.
Singapore’s surprise decision to widen its trading band against a basket of currencies contributed to a wider US dollar sell-off. The Singapore dollar hit a high of $1.2826, while the Australian dollar reached near parity with the greenback, touching A$0.9982.
China’s central bank set the renminbi reference rate against the dollar at a new high on Thursday. The renminbi has risen 2.5 per cent against the dollar since June when Beijing cut its de facto peg to the currency.
The yen briefly broke through levels of Y81 against the dollar for the first time since April 1995.