SE Asian currencies plunge to new lows<\/p>\n
SINGAPORE (Reuters): Asian financial markets took another
\nheavy battering yesterday as U.S. funds cut asset allocations and
\ncompanies desperate to hedge their exposures fled regional
\ncurrencies for the rampant U.S. dollar.<\/p>\n
Several Southeast Asian currencies plunged to new lows, taking
\nsome stock markets down with them. The currency blight spread to
\nAustralia and New Zealand and gold dipped to a new 18-year low on
\nworries about weak Asian economies and deflation.<\/p>\n
Foreign exchange dealers said short covering lifted some
\ncurrencies like the Malaysian ringgit and Singapore dollar off
\ntheir early lows but the general undertone for regional
\ncurrencies remained weak.<\/p>\n
\"The move down has been too swift and sharp. But there will be
\nbuying of dollars on any dips. Local corporates are still looking
\nbuying dollars for their own exposure,\" said a dealer with an
\nU.S. bank.<\/p>\n
Dealers said concern over the Malaysia's short term debt and
\nnervousness over a budget speech by Indonesian President Soeharto
\nlater in the day as well as the cloud of gloom over regional
\neconomic prospects spurred dollar buying.<\/p>\n
The dollar also strengthened against the Japanese yen, rising
\nto a high of 134.38 yen in early trade, its highest level since
\nApril 1992, prompting the Bank of Japan to intervene.<\/p>\n
\"American funds have been pretty aggressive in buying dollars
\nacross the board. It is hard tell which currency is leading in
\nthis latest round of falls, whether it's the ringgit or the
\nrupiah,\" said a currency dealer at a European bank.<\/p>\n
\"The Asian currency crisis is turning into an Asian debt
\ncrisis,\" said a dealer at an American investment bank.
\nHe said new figures from the Bank of International Settlement
\nshowing Malaysia's short term debt at 56 percent of total
\nborrowings from overseas banks, higher than a general 30 percent
\nestimate, spooked the market.<\/p>\n
\"It just shows that people do not have a handle on the
\nsituation,\" he said.<\/p>\n
The Malaysian ringgit settled at 4.3450 at 0910 GMT after
\nhovering between 4.1800 and 4.3400 throughout the day. Late on
\nMonday it was at 4.0550.<\/p>\n
The Indonesian rupiah hit a record low of 7,700 against the
\ndollar in early trading but short covering brought it back up to
\nits opening level of 7,000 in the late afternoon.<\/p>\n
\"The market is very thin and there is a lot buying of dollars
\nby local corporates in Jakarta to cover their dollar exposure,\"
\nan American trader said.<\/p>\n
Dealers said the rupiah remained weak on fears that the
\ngovernment lacked the political will to meet the tough conditions
\nimposed by the International Monetary Fund (IMF) for a US$40
\nbillion loan package. The IMF targets include a budget surplus of
\none percent of Gross Domestic Product for the financial year
\nbeginning April 1.<\/p>\n
Dealers said they expected dollar\/rupiah to reach 8,000 in the
\nshort term and perhaps 10,000 over the next six months.<\/p>\n
The Singapore dollar fell in sympathy with its two closest
\nneighbors. The Singapore dollar touched a low of 1.7420 after
\nopening at around 1.7200. It was hovering at 1.7345\/85 in late
\nafternoon.<\/p>\n
Dealers said there was good two way interest in the
\ndollar\/Sing with U.S. fund buying met by local bank selling.<\/p>\n
\"I think the next target could be 1.80 for the dollar\/Sing,
\nespecially with the other regional heading much lower,\" one
\ndealer said.<\/p>\n
The weak Sing pulled Singapore shares lower with the key share
\nindex shedding 3.80 percent, or 56.83 points, to end at 1,439.12.<\/p>\n
\"We are advising our clients to stay away. We are not even
\nsaying this is a right time to go in to search for good buys. Not
\nin this market,\" said one share dealer.<\/p>\n
The Thai baht plunged to a new low of 52 to the dollar after
\nBangkok said it wanted to review the IMF terms for its US$17
\nbillion aid package.<\/p>\n
The Philippine peso also fizzed downwards, breaching its third
\nvolatility band of 45.209 to the dollar in the afternoon,
\nfreezing all trades for the rest of the day.<\/p>\n
The Bankers Association of the Philippines said it would to
\nmaintain the volatility band at a maximum of six percent until
\nfurther notice.<\/p>\n
The Taiwan dollar touched a 10-year low of T$33.999 in early
\ntrade and recovered to close at T$33.755, but still more than
\nhalf a a Taiwan dollar below Monday's close of T$33.226.<\/p>\n
Dealers said the local currency was suffering from fears of it
\ntesting the T$35 level as dollar demand continues to grow.<\/p>\n
The Australian dollar toppled to 11-year lows as investors
\nscrabbled for U.S. dollars. It was at $0.6375\/70 in late trade
\nfrom $0.6481\/86 late Monday.<\/p>",
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