Regional currencies come under renewed pressure<\/p>\n
SINGAPORE (AFP): Southeast Asian currencies have come under
\nrenewed pressure after Malaysia and the Philippines received
\ncredit-outlook downgrades and a proposed regional bailout fund
\nfailed to take off.<\/p>\n
Last week's annual meetings of the International Monetary Fund
\n(IMF) and the World Bank in Hong Kong gave a mixed reception to a
\nstill hazy plan to set up a multi-billion-dollar war chest to
\ndefend economies from financial raiders.<\/p>\n
Markets are meanwhile awaiting developments in Thailand after
\nits parliament backed a new anti-corruption constitution and kept
\nPremier Chavalit Yongchaiyudh's shaky coalition in power by
\nvoting down a censure motion.<\/p>\n
U.S.-based credit rating agency Standard and Poor's on
\nThursday cited fears of a decline in Malaysian bank asset quality
\nwhen it downgraded the country's long-term foreign currency
\ncredit outlook from \"stable\" to \"negative.\"<\/p>\n
The revision sent the Malaysian ringgit crashing to a new
\nrecord low of 3.1450 to the dollar, although it recovered to
\nclose at 3.1220 on Friday, when the ratings agency turned its
\nsights on the Philippines.<\/p>\n
Standard and Poor's lowered Manila's long-term foreign and
\nlocal currency rating outlook from \"positive\" to \"stable,\"
\nreflecting the fall of the peso and the country's economic woes.
\nThe peso closed marginally lower at 33.52 pesos.<\/p>\n
The same day, the Indonesian rupiah plunged to an all-time low
\nof 3,125 to the US dollar on worries about the country's banking
\nand corporate sectors and fears that its credit outlook was next
\non the downgrade list.<\/p>\n
The Thai baht closed weaker at 35.20 to the dollar offshore
\nFriday ahead of Saturday's vote in Bangkok on the constitution
\nand the censure motion. The Singapore dollar, affected by
\nregional uncertainty, was also lower at 1.5230 to the US dollar.<\/p>\n
Following the key Thai parliamentary vote Saturday,
\nspeculation shifted to whose heads will roll as Premier
\nChavalit, paying the price for political survival, negotiated
\nwith coalition partners on the makeup of his cabinet.<\/p>\n
Southeast Asian currencies have fallen sharply since the Thai
\nbaht's de facto devaluation in early July shattered international
\nconfidence in the once booming region, which is now facing an
\neconomic slowdown.<\/p>\n
Officials of the IMF and World Bank, along with some western
\ncountries, last week reacted frostily to a proposed new facility
\nto help stabilize troubled Asian economies. Japan is supporting
\nthe plan but the United States would only go so far as to agree
\nto discuss the idea.<\/p>\n
As Southeast Asian countries pressed their case of a bailout
\nfund, bankers and economists were divided on the need for, and
\nviability of, a new facility apart from the IMF, the traditional
\nbanker of last resort for member countries.<\/p>\n
Thai Finance Minister Thanong Bidaya said during the IMF and
\nWorld Bank meetings that the fund could be as large as US$100
\nbillion.<\/p>\n
Eddie Lee, regional economist with investment house Vickers
\nBallas in Singapore, said \"on the one hand, there is an argument
\nthat the fund is needed as a disincentive to speculators.\"<\/p>\n
But he said \"there are people opposed on the argument that if
\ncountries are going to be bailed out so easily, then there is no
\nincentive\" for countries to watch after their economies more
\ncarefully.<\/p>\n
A European banker who attended the IMF and World Bank sessions
\nsaid the bailout plan was \"basically a very good idea because it
\ncreates a feeling of togetherness and a feeling of unity which is
\nalways good for a region.\"<\/p>\n
Asked about the view that a bailout fund might encourage
\nirresponsible behavior, like giving a teenager a credit card, he
\nsaid: \"It's a matter of the limit. If it's unlimited then you're
\nin deep trouble.\"<\/p>",
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