SE Asian currencies take a battering<\/p>\n
SINGAPORE (Dow Jones): Battered by a barrage of bad news,
\nSoutheast Asian currencies succumbed to downward pressure
\nyesterday, falling steeply against the U.S. dollar during Asian
\ntrading hours.<\/p>\n
The rupiah, the ringgit, and the Singapore dollar all dropped
\nheavily as factors as diverse as escalating riots in Indonesia
\nand a lack of bidders at a Singapore land auction prompted bank
\ndealers to sell down the region's currencies.<\/p>\n
The baht alone escaped the sell-off, dropping only moderately
\nin the spot market, although a rise in U.S. dollar\/baht swap
\nrates indicated that the Thai currency had not all together
\navoided coming under pressure.<\/p>\n
The rupiah led the way, plunging by 7 percent against the U.S.
\ncurrency during in Singapore, as a stream of reports from the
\nNorth Sumatra capital city of Medan described police firing live
\nrounds in an attempt to quell worsening anti-government riots.<\/p>\n
Panic buying of U.S. dollars for rupiah, mostly by Indonesian
\nmarket participants, according to traders, pushed the U.S. dollar
\neasily up through successive resistance levels.<\/p>\n
By late in Asian trading, the U.S. dollar was quoted at an
\nintraday high of Rp 8,675, up steeply from Rp 8,070 at the same
\ntime the previous day.<\/p>\n
In Jakarta, the rupiah was closed Rp 8,700 against the
\ngreenback while in London, the currency was opened at Rp 8,900.<\/p>\n
Other regional currencies also fell, partly on contagion from
\nthe rupiah and partly on their own poor sentiment.<\/p>\n
The ringgit headed down from early in the trading day as
\ndealers reacted to reports that the Malaysian government is to
\nset up a special body to aid companies in financial difficulties,
\na move traders said would merely institutionalize a culture of
\ncorporate bail-outs.<\/p>\n
Contagion from any instability in Indonesia is likely to hit
\nthe ringgit and the Singapore dollar hard, said traders and
\nanalysts.<\/p>\n
Although offshore market sentiment towards the rupiah is
\ndismal, the latest fall in the Indonesian currency is being
\ndriven principally by Indonesian capital flight, rather than by
\nspeculation by offshore players, according to traders.<\/p>\n
\"Nobody offshore is shorting the rupiah, the interest rates
\nwould kill you,' said one trader at a European bank, explaining
\nthat offshore rupiah interest rates of around 50 percent are
\ndeterring players from borrowing the currency in order to sell it
\nshort.<\/p>\n
Instead proprietary traders are selling the ringgit and the
\nSingapore dollar, which carry much lower interest rates, as
\nproxies for the Indonesian currency.<\/p>\n
\"Paradoxically, any blow-up in Indonesia will have more effect
\non the other regional currencies than it will on the rupiah
\nitself,\" warned Chia at Enskilda.<\/p>\n
Despite the falls in other Southeast Asian currencies on
\nWednesday and the credit downgrade of eight Thai financial
\ninstitutions by the Standard & Poor's rating agency, the baht
\nremained largely unaffected.<\/p>\n
Late in Asia the U.S. dollar was quoted at 38.6050 baht,
\nrelatively little changed compared with its level late Tuesday of
\n38.4250 baht.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/se-asian-currencies-take-a-battering-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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