Southeast Asian currencies slide as market mood sours<\/p>\n
SINGAPORE (Reuters): Southeast Asian currencies slid yesterday
\nas market sentiment turned sour in the build-up to the Malaysian
\nbudget and Indonesia's IMF-led aid package.<\/p>\n
The gloom spread to stock markets as prospects of the ringgit,
\nrupiah, baht and peso pulling out of the slump appeared to recede
\nyet further.<\/p>\n
The Indonesian central bank intervened sporadically to prop up
\nits rupiah from an early low of 3,660 to the dollar, helping it
\nstabilize temporarily.<\/p>\n
But the currency failed to stage a convincing recovery and
\nslid further to 3,670\/80 by 0945 GMT, more than two percent down
\nfrom its 3,565\/75 levels late on Wednesday.<\/p>\n
\"The central bank came in regularly with small amounts of
\ndollars, trying to limit the fall. But we see sustained dollar
\nbuying from domestic and offshore players,\" one dealer said.<\/p>\n
Uncertainty about the nature and amount of assistance the
\nInternational Monetary Fund (IMF) would arrange for Indonesia and
\nfears of corporate debt defaults weighed on the rupiah.<\/p>\n
An IMF team arrived in Indonesia at the weekend, but there has
\nbeen no official estimate of how much it will lend to Indonesia
\nand on what terms.<\/p>\n
IMF First Deputy Managing Director Stanley Fischer said on
\nWednesday a deal could be in place within two weeks. The IMF was
\nlikely to agree with Jakarta that financial sector, trade and
\ndistribution sector reforms would be key elements, he said.<\/p>\n
The Malaysian ringgit touched a low of 3.1950 to the dollar
\nagainst its late Wednesday levels of 3.1550\/650 as optimism about
\nthe budget evaporated a day before its release.<\/p>\n
\"I doubt there'll be any big positive surprises in the budget.
\nAnd the problem is always how they're going to implement any
\nchanges and whether they really will,\" said a senior European
\nbank dealer in Singapore.<\/p>\n
The ringgit was at 3.1770\/870 to the dollar at 0945 GMT.
\nMost dealers said Malaysian Prime Minister Mahathir Mohamad's
\nspeech at the opening of a regional economic ministers meeting in
\nKuala Lumpur had little impact on the market.<\/p>\n
Careful<\/p>\n
Mahathir called on them to liberalize trade carefully and
\nstressed the need for distinguishing between short-term
\nspeculative inflows and serious investments.<\/p>\n
But some attributed the ringgit's decline to the mere fact
\nthat Mahathir -- whose recent calls for curbs on forex trading
\nhave terrified markets -- had spoken.<\/p>\n
\"Whenever he speaks now, people get worried and buy
\ndollar\/ringgit. It doesn't really matter what he says,\" the
\nEuropean bank dealer said.<\/p>\n
The Singapore dollar hovered within reach of the 1.55 level to
\nthe U.S. dollar for most of the day with interest focused on the
\nringgit\/Singapore dollar cross.<\/p>\n
The Thai baht fell further to 36.63\/73 to the dollar onshore
\nfrom 36.45\/65 late on Wednesday.<\/p>\n
Unhappiness with Bangkok's financial reform package, coupled
\nwith speculation it would lift the two-tier baht system, kept the
\noffshore rate even more depressed.<\/p>\n
It was at 37.00\/10 against 36.60\/90 even after central bank
\ngovernor Chaiyawat Wibulswasdi denied the speculation.<\/p>\n
Offshore pessimism appeared to be borne out by the central
\nbank's announcement that Thailand's gross domestic product would
\ngrow at a rate above 1.0 percent in 1997, below its earlier
\nforecast of 2.5 percent.<\/p>\n
The Philippine peso ended steady at 33.75 to the dollar as
\nbanks held back dollar purchases due to restrictions on holding
\nlong dollar positions.<\/p>\n
The market shrugged off the central bank's early sale of
\ndollars at 33.75 pesos and the peso only recovered from a low of
\n34.30 because demand for dollars from companies and banks fell.<\/p>\n
The Taiwan dollar closed lower at T$28.550 after recovering
\nfrom an unexpected afternoon drop, which fueled speculation the
\ncentral bank might be relaxing its defense of its currency.<\/p>\n
But it said after the market closed the Taiwan dollar was
\nundervalued and vowed to continue defending it. The central bank
\nalso ordered another cut in commercial bank reserve requirements
\nto bolster money market liquidity, a move seen as aimed at
\nrestoring the sagging stock market.<\/p>\n
Taipei shares crumbled through the psychological 8,000 support
\non Thursday, ending 3.2 percent lower at 7,997.81.<\/p>",
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