SE Asian currencies fragile despite IMF bid of confidence<\/p>\n
SINGAPORE (AFP): Southeast Asian currencies could face new
\ntests despite a thumbs-up from IMF chief Michel Camdessus amid
\nturmoil in North Asia and fears that financial malaise could
\ncreep worldwide, bankers said.<\/p>\n
The managing director of the International Monetary Fund (IMF)
\ntoured Southeast Asian countries last week to meet presidents and
\nprime ministers, lauding their efforts to put their economies
\nback into shape.<\/p>\n
He predicted a new period of sustained high growth after a
\nshort and sharp adjustment, but his optimism failed to rub off on
\nregional currencies.<\/p>\n
"He has to say such things," said a Singapore-based currency
\nanalyst who remained pessimistic about short-term prospects.<\/p>\n
Malaysian Premier Mahathir Mohamad, who accuses foreign
\nspeculators of bringing down the currencies, said over the
\nweekend that depreciation may have wiped off some US$200 billion
\nfrom the wealth of Southeast Asian nations.<\/p>\n
Those behind the downfall of the region's currencies since
\nJuly would "soon find that by making us poor, they will lose this
\nmarket," he warned.<\/p>\n
The Thai baht eased to 38.80 to the dollar offshore last
\nFriday -- after surging to around 37 to the dollar at the start
\nof the week -- as euphoria over the return to power of former
\npremier Chuan Leekpai dissipated.<\/p>\n
What remains to be seen is whether the appointment of a new
\nThai cabinet after markets closed Friday will inject strength
\ninto the baht this week.<\/p>\n
The Indonesian rupiah, boosted earlier by a massive IMF-led
\nrescue package, ended lower Friday at 3,440 to the dollar amid
\nlingering concern over local banks.<\/p>\n
The week before, it had closed at 3,280 following concerted
\nintervention by the central banks of Indonesia, Singapore and
\nJapan as part of an IMF-engineered economic rescue plan.<\/p>\n
The Malaysian ringgit ended the week at 3.3200, lower than its
\nclose of 3.3000 the week before, despite an IMF assurance that
\nthe country needed no emergency help. The Singapore dollar closed
\nlower at 1.5815 from 1.5675 the week before.<\/p>\n
The Philippine peso was one bright spot, thanks to rising
\nremittances of overseas workers ahead of the largely Roman
\nCatholic country's irrepressible Christmas binge. It ended the
\nweek at 33.98, up from 34.85 the week before.<\/p>\n
Tan Kee Wee, an economist with the United Overseas Bank, one
\nof Singapore's top banks, said that "as calm has not really
\nreturned to the Asian region yet, there is every possibility"
\nthat regional currencies "could go into another tailspin this
\nweek."<\/p>\n
Daragh Maher, an economist with Dutch bank ING Barings, said
\nsentiment on most Southeast Asian currencies "is still quite
\nfragile."<\/p>\n
"We might not see the same degrees of volatility but a drift
\nweaker in most regionals is quite likely," he said, adding that
\nthe impact of the currency crisis was just "beginning to feed
\nthrough" the economies.<\/p>\n
Eddie Lee, regional economist with investment house Vickers
\nBallas, said: "I'm not looking for a quick rebound at this point.
\nNorth Asia has become a big question."<\/p>\n
Much attention was focused on the Japanese yen last week after
\nit fell past the 125 to the dollar level amid weakness in the
\nJapanese stock market.<\/p>\n
The South Korean won came within a hair of falling past the
\n1,000 to the dollar level but was pulled from the brink by the
\ncentral Bank of Korea. It ended Friday at 986.50 to the dollar.<\/p>\n
The Taiwan dollar, bumping around 10-year lows amid pressure
\non its two neighbors, closed the week at 31.24 to the dollar and
\nwas expected to test the 32 level despite warnings of central
\nbank intervention.<\/p>\n
U.S. Federal Reserve Chairman Alan Greenspan told the U.S.
\nCongress that the impact of Asia's economic turmoil has been
\n"modest" but not negligible, adding that U.S. exports could be
\n"muted" depending on the extent of the Asian slowdown.<\/p>\n
U.S. rating agency Standard and Poor's (S and P) said the pain
\ninflicted on investors by economic turbulence in East Asia was
\nturning many bank loans sour, and the risk may spread to banks in
\nother regions of the world.<\/p>",
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