SE Asian currencies on slippery ground<\/p>\n
SINGAPORE (Reuter): Southeast Asian currencies remained on
\nslippery ground yesterday after coming under renewed pressure as
\nthe Thai baht slid to new lows.<\/p>\n
Poor market liquidity and wide spreads added to market
\nvolatility as players turned increasingly nervous ahead of an
\nAsian central bankers meeting in Shanghai on Friday.<\/p>\n
Dealers said expectations the meeting might produce some form
\nof coordinated intervention to counter the speculative onslaught
\non the region's currencies kept the dollar in demand.<\/p>\n
\"The big issue for the market at the moment is this meeting in
\nShanghai as there is the possibility of concerted intervention or
\na statement that they are willing to join hands to support
\ncurrencies,\" said Chiang Yao Chye, economist at CIBC Wood Gundy
\nin Singapore.<\/p>\n
The Thai central bank intervened to stem the baht's slide as
\nit was pulled down by heavy commercial demand for dollars.<\/p>\n
\"We noticed the central bank intervened to stop the baht's
\nfall at around the 32.50\/32.60 to the dollar level,\" a senior
\ndealer at a local bank in Bangkok said.<\/p>\n
The baht hit a record low at one point with some dealers
\nreporting transactions at as low as 32.60 to the dollar. At 1050
\nGMT, it was quoted at 32.250\/32.550 onshore and 31.500\/31.550
\noffshore.<\/p>\n
Dealers attributed the sharp plunge in the onshore market
\nmainly to sales by importers seeking dollars to pay their bills
\nand by corporations needing the dollar to repay foreign loans.<\/p>\n
They said the central bank did not need to sell large amounts
\nof dollars to curb the fall because the pressure was mainly from
\nlocal players trading in small amounts.<\/p>\n
A senior Thai central bank official attributed the baht's weak
\ntone to poor first-half earnings reported by local banks and
\nfinance companies.<\/p>\n
The Singapore dollar succumbed to fresh selling after comments
\nby Finance Minister Richard Hu which players treated as yet
\nanother signal to buy the U.S. dollar.<\/p>\n
Hu told parliament Singapore dollar's exchange rate was
\ndetermined by market forces and its recent appreciation against
\nits neighbors, especially the baht and Indonesian rupiah, did not
\npose a significant threat to its competitiveness.<\/p>\n
\"Our exchange rate policy should not be guided by short-term
\nexpediency considerations. We always focus on managing the
\nexchange rate of the Singapore dollar on a trade-weighted basis
\nwith a medium-term perspective,\" Hu said.<\/p>\n
The Singapore dollar fell to a low of around 1.4690 to the
\nU.S. dollar after the comments, compared with 1.4645 earlier.<\/p>\n
The Malaysian ringgit was hit by fresh waves of selling by
\noffshore U.S. banks despite talk that the central bank had
\nintervened to sell dollars around 2.6350\/70 ringgit.<\/p>\n
The ringgit was quoted at 2.6355\/85 to the dollar against a
\nmorning low of 2.6230.<\/p>\n
\"We are not sure if there is any intervention at all. The said
\nbanks could be taking their own positions,\" a dealer at a
\nMalaysian bank in Kuala Lumpur said.<\/p>\n
The Indonesian rupiah remained weak after being dragged down
\nby the slump in the baht. Spot rupiah was at 2,587\/97 against an
\nopening of 2,570\/80.<\/p>\n
\"We saw some central bank intervention at the 2,580 level
\nwhich helped boost the rupiah to 2,540 level in late morning, but
\nuncertainty in Thailand kept the dollar tone biddish,\" a U.S.
\nbank dealer in Jakarta said.<\/p>\n
\"If the rupiah could break the 2,500 resistance level, then
\nthere is potential for a strong comeback. But if it falls below
\nthe 2,600 level, speculators would launch an attack to test the
\nband again,\" a local bank dealer said.<\/p>\n
The Philippine peso fell on commercial demand for dollars,
\nclosing at 28.50 to the dollar against 28.15 previously.<\/p>",
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