Greenback down in Asia as debt default looms
AFPSINGAPORE--The dollar weakened in Asian trade Monday as lawmakers in Washington struggle to agree a budget deal that will avoid a damaging debt default.
October 15, 2013, 12:08 am TWN
In Singapore afternoon trade, the greenback slipped to 98.27 yen from 98.59 yen in New York late Friday.
The euro rose to US$1.3565 from US$1.3546 but dipped to 133.30 yen from 133.55 yen. Japanese markets are closed for a public holiday.
Republicans and Democrats were unable to find a compromise after a rare Sunday session to hammer out a deal to reopen the federal government and raise the country's borrowing limit before an Oct. 17 deadline.
“So far, markets have not panicked because both parties have come out to reassure that they are working towards a compromise after every failed vote, keeping alive hopes for a last-minute deal,” DBS Bank said in a note.
The Singapore bank however held a dim view of any stop-gap measures to extend the deadline for the debt default.
“The Senate has reportedly taken over negotiations and is looking to extend the deadline to next March in exchange for watering down the next round of (public spending cuts) due next year,” it said.
“Even if a compromise can be reached, this will only provide a temporary relief for the U.S. dollar, and sets the stage for more budget fights ahead of next year's mid-term elections.”
The dollar was mixed against other Asia-Pacific currencies.
It slipped to SG$1.2458 from SG$1.2487 in Tokyo on Friday, and to 10,940 Indonesian rupiah from 11,463 rupiah.
The greenback edged up to 1,072.31 South Korean won from 1,070.34 won, to 43.16 Philippine pesos from 43.10 pesos, and to 61.23 Indian rupees from 61.16 rupees, while holding steady at 31.31 Thai baht.
The Australian dollar weakened to 94.68 U.S. cents from 94.74 U.S. cents on Friday, while the Chinese yuan bought 16.07 yen from 16.09 yen.