Asia currencies ease as intervention hopes fade
Asia currencies ease as intervention hopes fade
SINGAPORE (Reuters): Asian currencies were weak but off their lows yesterday as hopes of intervention by the Group of Seven (G-7) to shore up Asia's ailing currencies diminished.
U.S. Treasury Secretary Robert Rubin said ahead of a G-7 meeting of finance ministers and central bankers in London this weekend the group would press Japan to play a bigger role in helping Asia recover.
He declined to comment on the possibility of the G7 discussing foreign market intervention, a hope which fueled Asian currencies on Thursday.
"I never discussed intervention," he said.
Rubin said the G-7, which comprises Britain, Canada, France, Germany, Italy, Japan and the United States, would focus on the Asian economies and on trade financing to the region.
He made no mention of Indonesia's proposed currency board system, a controversial plan that could see the International Monetary Fund (IMF) withdraw its $43 billion bail-out aid.
"The sentiment is kind of mixed following Rubin's comments," said a dealer with a U.S. institution.
"Rubin's comments triggered a round of dollar short-covering against most Asian currencies. But the market is now sidelined, still hoping for positive statements from the G-7 or some kind of contingency plans for Asia," he said.
This lingering hope of some form of aid was limiting the slides in the regional currencies, dealers said.
Trading in the Indonesian rupiah, which came under heavy speculative attacks following President Soeharto's controversial proposal to install a currency board system, was almost at a standstill.
Activity was also stymied by hopes the G-7's communique would contain a rupiah-stabilizing alternative to a currency board.
"The speculative interest in the rupiah is not there any more. The rupiah seems to have found an equilibrium at 9,000 and 9,500 to the U.S. dollar. The market is not interested in taking it above 10,000 or below 8,000 at the moment," one dealer said.
The rupiah was expected to stay range-bound ahead of the Indonesian presidential elections in March which are almost certain to return the 76-year-old Soeharto to power.
The market focus and activity seemed to have shifted to the Malaysian ringgit and the Singapore dollar, dealers said.
"The two currencies are more liquid and there has been a lot of interest in ringgit/Sing in the past few weeks. The market is trying to find an equilibrium for these two currencies," said the dealer.
The Singapore dollar traded around 1.63 in the morning, but tested the 1.65 level following the release of weaker-than- expected trade exports for January.
Profit-taking as players squared their dollar positions ahead of the weekend helped push the Sing dollar back to 1.6350/70 in late Friday trade.
The ringgit was quoted at 3.7400/75 compared to 3.7400/7700 on Thursday as players covered their dollar positions. Its slide was seen limited to 3.90 ahead of the G7 meeting.
Increasing tension in the Middle East plagued the Thai baht. It was seen at 44.500/000 compared to 44.75/95 on Thursday on corporate buying of dollars.
"I think we are probably looking in the 44.50-45.30 range today. People are watching Iraq so there is a little bit (of bias) towards the dollar ... and there are people looking for dollars on baht strength," said a dealer at a large Thai bank.
In north Asia, the Taiwan dollar ended lower as the U.S. dollar strength overseas triggered importer's dollar buying.
The Taiwan dollar was expected to trade around T$32.70-90 range in the near term.
The South Korean won was a shade firmer on expectations more foreign funds would flow into its stock markets.
The Hong Kong dollar remained weak against the greenback after rating agency Moody's Investor Service cut Hong Kong's short-term ratings.