Intervention calms Asia's markets<\/p>\n
HONG KONG (AFP): Central banks in Southeast Asia's booming
\neconomies acted swiftly yesterday to calm their financial markets
\nafter being dragged into the fall-out of the Mexican peso
\nmeltdown.<\/p>\n
In Hong Kong and Jakarta, central banks succeeded in warding
\noff speculators who might have considered the region's emerging
\nmarkets as vulnerable as those in Latin America.<\/p>\n
\"It looks like the central banks have completed their task --
\nthat is, to calm down the markets,\" said Eddie Tan, Citibank's
\nvice president and foreign exchange manager in Singapore.<\/p>\n
\"Now they may want to let fundamentals rule the market again,\"
\nhe said.<\/p>\n
Hong Kong's quasi-central bank, the Monetary Authority, acted
\nfor the third time in as many weekdays to prop up the colony's
\ndollar by withdrawing a further HK$2.94 billion (US$379 million)
\nfrom the banking system.<\/p>\n
\"The move was necessary,\" a spokesman said, citing the threat
\nof further speculation on a currency already left sagging by a
\nbig sell-off by foreign fund managers of Hong Kong stocks.<\/p>\n
The intervention helped the Hong Kong dollar to stabilize at
\n7.747-7.748 per U.S. dollar, compared to its 18-month low last
\nweek of 7.763-7.765 after the sudden 15 percent depreciation of
\nthe Mexican peso.<\/p>\n
The overnight rate charged on inter-bank loans meanwhile eased
\nto five to six percent, compared with 12 percent on Friday.<\/p>\n
Jakarta<\/p>\n
In Jakarta, the Indonesian central bank raised its key one-
\nmonth discount rate to 15.75 percent, up half a percentage point,
\nto encourage investors to sell U.S. dollars and buy rupiah.<\/p>\n
The tactic appeared to work, with the rupiah trading in the
\n2,211-2,213 range for most of the day after opening weaker at
\n2,218. Three- and six-month swap contracts traded within a tight
\nrange.<\/p>\n
\"I think they effectively intervened in the market,\" said
\nCredit Lyonnais Indonesia treasury manager Charley Seliang.<\/p>\n
Yesterday's interest rate rise followed two interventions by
\nthe central bank on Friday, officially said to have involved
\nUS$140 million. Other estimates have put the action at more than
\n$700 million.<\/p>\n
Bangkok's currency markets returned to normal after Friday's
\n400 million U.S. dollar intervention by the Bank of Thailand,
\nwith the baht changing hands at 25.08 per U.S. dollar -- compared
\nwith Thursday's 26.20.<\/p>\n
In Singapore, Citibank's Tan said the peso crisis had clearly
\nshown the enormous muscle of Southeast Asian central banks, flush
\nas they are with reserves which reflect the region's economic
\nhealth.<\/p>\n
\"Armed with excess reserves, the central banks have showed how
\nquickly they could restore calm,\" Tan said.<\/p>\n
Closing rates in Singapore, a major center for dealing in
\nSoutheast Asian currencies, saw the Malaysian ringgit at 2.5540,
\nthe Singapore dollar at 1.4510, and the Thai baht at 25.08 per
\ngreenback.<\/p>\n
\"The Indonesian rupiah is the weakest and most vulnerable of
\nthe regional currencies,\" a senior dealer with Banque Nationale
\nde Paris said. \"So it may take some time for it to recover.\"<\/p>\n
\"The rule of thumb is to always be cautious after central bank
\ninterventions,\" the dealer added. \"So the short term outlook is
\nstill one of caution.\"<\/p>\n
In Manila, the Philippine peso stabilized against the U.S.
\ndollar yesterday on heavy Central Bank intervention after it
\ntaking a beating last Friday, officials said.<\/p>\n
The Philippine Dealing System (PDS) said the average rate was
\n24.67 pesos to a dollar, compared to 24.716 on Friday.<\/p>\n
Currency traders said the Central Bank unloaded five million
\npesos to account for 41.66 percent of the 12 million pesos
\n($486,000) changing hands.<\/p>",
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