Indonesia doubts paralyze Asian currencies<\/p>\n
SINGAPORE (Reuters): Asian currencies were stuck in well-worn
\nterritory yesterday as Indonesia remained in the hot seat and
\ntraders looked desperately for clues about the fate of the
\nrupiah.<\/p>\n
Uncertainty over whether Jakarta would go ahead with a
\ncurrency board or some other system to stabilize the rupiah
\nseverely hampered activity in regional currency markets.<\/p>\n
\"All the flows are commercially driven. It's just been too
\nchoppy recently and banks are not willing to take positions,\" a
\nEuropean bank dealer in Singapore said.<\/p>\n
\"There are market rumors that Indonesia might implement a two-
\ntier system to protect its own market...But that would just be a
\nshort-term way of dealing with the crisis,\" she added.<\/p>\n
Thio Chin Loo, strategist at Banque Paribas, said in a daily
\nreport that a two-tier system was already effectively in place
\nfollowing the government's announcement that it would subsidize
\nessential imports at a fixed rate of 5,500 rupiah to the dollar.<\/p>\n
The market was also awaiting details of Indonesia's new
\ncabinet, expected to be announced by the end of the week, and
\nJapanese Prime Minister Ryutaro Hashimoto's visit to Jakarta.<\/p>\n
Questions about the next disbursement of IMF money to the
\ncountry and deliberations over its economic reforms added to the
\nlong list of reasons not to do anything, traders said.<\/p>\n
News Indonesia would not be sending a delegation to the United
\nStates next week, as previously announced, but would be receiving
\na senior IMF team instead was shrugged off by the market.<\/p>\n
\"I guess the Americans don't want to spoil the austerity
\ndrive. It's cheaper for them to come to Jakarta than the other
\nway around,\" said one dealer.<\/p>\n
The World Bank's chief economist, Joseph Stiglitz, said he
\nexpected the IMF to show flexibility over Indonesia's currency
\nboard proposal.<\/p>\n
His comments mirrored Indonesian Vice-President B.J. Habibie's
\nremark in a Japanese newspaper interview that Indonesia was
\nwilling to consider an alternative to the currency board.<\/p>\n
Elsewhere, the Malaysian ringgit and Singapore dollar
\nbenefited from U.S. investment houses reducing their long dollar
\npositions.<\/p>\n
But most dealers did not expect the ringgit to strengthen
\nbeyond 3.80 to the dollar and said the Singapore dollar's rise
\nwould be blocked at 1.6150 against its U.S. counterpart.<\/p>\n
The Thai baht held up well but dealers said heavy corporate
\ndemand for dollars below 42.50 baht was slowing its rise as the
\nmarket awaited developments from Prime Minister Chuan Leekpai's
\nvisit to the United States.<\/p>\n
Deputy Finance Minister Pisit Leeahtam said Thailand planned
\nto raise funds abroad by issuing government bonds in a month or
\ntwo.<\/p>\n
The Philippine peso was firm but sluggish as the central bank
\nannounced a series of changes including new statutory and reserve
\nrequirements and shortened time for banks to comply with general
\nloan loss provisioning.<\/p>\n
In North Asia, the Taiwan dollar ended lower as the yen slid
\namid mounting pressure on the Bank of Japan governor to resign
\ndue to a widening bribery scandal.<\/p>\n
Chinese Foreign Minister Qian Qichen criticized Taiwan for
\ndevaluing its currency last October, saying it \"added fuel to the
\nflames\" of Asia's financial crisis.<\/p>\n
The South Korean won strengthened amid abundant dollar
\nliquidity and traders said it could head for 1,550 to the dollar
\non stop-loss dollar sales.<\/p>\n
The Hong Kong dollar was steady and forwards firmed on the
\nyen's drop and position covering after three days of losses.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indonesia-doubts-paralyze-asian-currencies-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}