Speculators challenge central banks' resolve<\/p>\n
SINGAPORE (Agencies): Offshore funds tested again regional
\ncentral banks' resolve yesterday on comments by Malaysian and
\nSingapore authorities that they were not overly concerned by the
\nrecent fall in their currencies.<\/p>\n
Indonesia's central bank was forced to intervene to defend the
\nrupiah, which sank to a record low under attack from speculators
\nwho tightened the screws on battered Southeast Asian currencies,
\ndealers said.<\/p>\n
Speculators, turning their sights from the Singapore dollar
\nand the Malaysian ringgit which slumped to three-year lows
\nearlier this week, aimed their attacks mainly at the rupiah
\nyesterday.<\/p>\n
\"There seems to be a baton passing among the emerging
\ncurrencies. It is evident they are under rotational selling
\npressure from offshore funds,\" said Andy Tan, general manager of
\nMMS in Singapore.<\/p>\n
\"You could say they (funds) are perhaps trying to see where
\nthe upper limit lies for the dollar against various currencies,\"
\nhe said.<\/p>\n
Daniel Lian, head of Asian currency research at NatWest
\nMarkets, said hedge funds were also still bearish on other
\nregional currencies, which have been under relentless pressure
\nsince the Thai baht's float on July 2.<\/p>\n
The Singapore dollar hit 1.5175 to the U.S. unit -- the lowest
\nsince July 1994 -- before recouping to 1.5115 at the end of
\ntrading. It had closed the previous day at 1.5100 after hitting a
\n37-month low of 1.5140.<\/p>\n
The Malaysian ringgit -- which tested a 42-month low Tuesday
\nof 2.7930 before recovering to end at 2.7715 -- fell to 2.7775 to
\nthe greenback and the Thai baht ended slightly higher at 31.20
\nfrom 31.45.<\/p>\n
In Manila, the Philippine peso closed Wednesday at 29.05 pesos
\nto the U.S. dollar, down 1.4 percent from Tuesday's finish.<\/p>\n
Malaysia's central bank was closely monitoring the ringgit
\nyesterday, dealers said in Kuala Lumpur, adding that it would
\nhave to intervene if the 2.8 level was reached.<\/p>\n
Desmond Supple, head of Asian currency research at Barclays
\n(BZW) Global Foreign Exchange, said the market was looking to buy
\nthe U.S. dollar on any temporary strength in regional currencies.<\/p>\n
\"The market is aware that intervention is likely to prove
\nself-defeating in the current conditions.<\/p>\n
\"The weakness isn't only due to short-term speculative play.
\nIt is more broad-based and there is much genuine demand for the
\nU.S. dollar among genuine investors and local corporates.<\/p>\n
\"This reduces the efficacy of any intervention and ultimately
\ninflates the cost of such action,\" Supple said.<\/p>\n
\"It's useless for the central bank to intervene in a bearish
\nmarket,\" said Jimmy Koh, regional economist for the I.D.E.A.
\nresearch consultancy.<\/p>\n
He noted that the Malaysian central bank had spent some $8.8
\nbillion in intervention measures when the ringgit was under
\nattack earlier this month, but with little to show for its
\nefforts.<\/p>\n
\"They are raising short-term rates but keeping the long-term
\nrates, which determine lending and spending behavior in the
\neconomy, at current levels,\" said Manu Bhaskaran, Group Head of
\nResearch at SocGen Crosby.<\/p>\n
\"The central bank has a clear strategy and I think they will
\nuse short-term rates where necessary to hold the currency.\"<\/p>",
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