SE Asian currencies share yen's debacle<\/p>\n
SINGAPORE (Dow Jones): Sky-high offshore interest rates failed
\nto protect Asia's regional currencies from yesterday's plunge in
\nthe yen and the resulting collapse of regional stock markets.<\/p>\n
Despite the noose-tight liquidity, which drove the interest
\nrates implied by offshore swap rates still higher yesterday,
\ncurrencies throughout Southeast Asia ended the day substantially
\nlower against the U.S. dollar.<\/p>\n
\"As long as the yen keeps falling, other Asian currencies will
\ngo down with it,\" says Koh Foong Yin, head of research at
\nOverseas Union Bank in Singapore. \"Asia is in a no-win situation
\nwhere the problems are only getting worse. At this point I don't
\nthink there is any action that can be taken without the
\nstabilization of the yen.\"<\/p>\n
During Asian trading hours yesterday the U.S. dollar touched
\n146.55 yen, its highest level since August 1990. With little sign
\nof any coordinated international policy response, most market
\nparticipants forecast that the U.S. currency would continue to
\nappreciate to levels around 150 yen or even 160 yen, with a
\ncorresponding impact on regional currency exchange rates.<\/p>\n
Adding to negative sentiment Monday was a Hong Kong newspaper
\nreport that Chinese Vice Premier Li Lanquin had indicated that
\nChina may reverse its commitment not to devalue the yuan should
\nthe yen drop further. A yuan devaluation, argue many traders and
\nanalysts, would spark a renewed round of competitive devaluations
\nin Asia, plunging regional markets in to ever deeper gloom.<\/p>\n
However, a China central bank official later repeated the
\nbank's pledge that it won't devalue the yuan.<\/p>\n
The Singapore dollar, the most liquid of the regional
\ncurrencies, attracted the highest level of speculative selling,
\nsaid traders, despite a liquidity squeeze which saw the overnight
\ninterbank offered rate bumped up to 9 percent from 7 percent late
\nFriday.<\/p>\n
Of other Southeast Asian currencies, both the Indonesian
\nrupiah and the Philippine peso came under heavy selling pressure
\nyesterday.<\/p>\n
Late in Asia the U.S. dollar was quoted at Rp 14,700, up from
\nRp 13,800 Friday. Meanwhile at the close of trading on the
\nPhilippine Dealing System, the U.S. currency was at 42.450 pesos,
\nup sharply from 40.240 pesos at Thursday's close. Philippine
\nmarkets were closed Friday for a public holiday.<\/p>\n
In north Asia the won ended steeply lower as the South Korean
\ncurrency continued to track the fall in the yen. At the end of
\ntrading in the domestic market the U.S. dollar was quoted at
\n1,433 won, up from 1,398.50 won at Friday's close.<\/p>\n
The only currency successfully to resist the region-wide slide
\nwas the new Taiwan dollar, which ended the day higher following
\nfurther vigorous intervention by the Central Bank of China,
\nTaiwan's central bank, to follow repeated central bank actions
\nlast week.<\/p>\n
Dealers in Taipei estimated that the authorities sold as much
\nas $100 million to suppress the U.S. currency below the
\npsychologically significant NT$35.00 level.<\/p>\n
At the close of domestic trading, the U.S. dollar was quoted
\nat NT$34.872, down from NT$34.892 at the end of Friday's session.<\/p>",
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