All eyes turn to Thai bailout<\/p>\n
SINGAPORE (AFP): Southeast Asian currency markets are
\nanxiously awaiting the International Monetary Fund (IMF) bailout
\nplan for Thailand as the region's monetary crisis enters its
\nsecond month with no clear end in sight.<\/p>\n
Since the Thai baht was effectively devalued July 2, the
\nPhilippine peso, the Malaysian ringgit, the Indonesian rupiah and
\nthe Singapore dollar have all plunged to levels unseen in years
\nas speculators capitalized on real and perceived weaknesses in
\nthe region.<\/p>\n
Economists said a positive Thai government reaction to the IMF
\nrescue package, expected to be unveiled early this week and
\nlikely to prescribe bitter financial medicine, would provide some
\nrelief for regional currencies.<\/p>\n
\"We expect the IMF to suggest some form of belt-tightening in
\nterms of government spending and also a more conservative
\napproach with regard to the financial sector,\" said Andy Tan,
\ngeneral manager of investment house MMS International in
\nSingapore.<\/p>\n
\"If the government is reluctant or unwilling, that could spark
\nfresh weakness,\" he warned. \"If the baht continues to be under
\nattack, then the rest of the Southeast Asian currencies could be
\naffected as well.\"<\/p>\n
\"The baht is the catalyst for the region at the moment,\" said
\nDesmond Supple, head of Asian currency research at BZW (Barclays)
\nGlobal Foreign Exchange in Singapore. \"The baht is providing
\ntrading direction.\"<\/p>\n
He said any salutary effects from the IMF package on currency
\nstability could be short-lived because baht weakenesses would
\nresurface, triggering another across-the-board attack on regional
\ncurrencies.<\/p>\n
Supple said IMF austerity measures could lead to a slowdown in
\ngrowth and rising credit risks, \"and that's an environment that
\nis not conducive to renewed capital inflows.\" Moreover, some 40
\nbillion dollars in short-term Thai debt is maturing in the next
\n12 months, he said.<\/p>\n
\"It all suggests that the baht has a lot further to fall
\nbefore it can begin to stabilize,\" Supple said.<\/p>\n
The baht, which closed here Friday at 31.90 to the dollar, has
\nshed 29 percent of its value offshore since a managed float was
\nannounced by the central Bank of Thailand on July 2.<\/p>\n
The Philippines was forced to do the same for the peso on July
\n11. On Friday it traded at around 29.00 to the dollar, nearly 10
\npercent down from pre-depreciation levels.<\/p>",
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