Asia currencies roused by dull U.S. dollar
Asia currencies roused by dull U.S. dollar
SINGAPORE (Reuters): Asian currencies leapt yesterday as the
U.S. dollar slid against the yen and stock markets across the
region took their cue from Wall Street's second session of gains.
The dollar was hovering around 131 yen in late Asian trade
against an overnight high of 132.95 yen, partly due to a rebound
in Tokyo stocks.
Soothing comments about Asia's financial crisis by officials
from the United States and the International Monetary Fund (IMF)
spurred players to reduce dollar holdings.
Dealers said the gains were accelerated by stop-loss sales of
the U.S. dollar in thin markets for some Asian currencies, but
few were willing to bet on a turnaround in sentiment.
"The Dow did pretty well yesterday and that's leading the
Asian stock markets and adding to the speed of the recovery in
the currencies," said a U.S. bank dealer in Singapore.
"But I'm still not too optimistic on Indonesia. Basically, I
see this as a correction in the (U.S.) dollar."
Dealers said they were still awaiting details of talks
between IMF officials and Indonesian leaders, due on Thursday, to
decide on the rupiah's direction.
IMF Managing Director Michel Camdessus' comment that Indonesia
needed to accelerate long overdue economic reforms and that the
fund expected a new letter of intent from Jakarta committing
itself to such reforms had little impact.
The baht firmed to 53.00/20 to the dollar onshore against
55.70/55.90 late on Tuesday. Offshore, it was sharply higher at
50.55/85 against 53.50/54.00.
"There are lots of positive factors coming in to support the
baht -- the calmer regional situation, the better-than-expected
current account data and kind words from the United States," a
foreign bank dealer in Bangkok said.
Thailand recorded a current account surplus of $2.5 billion
during the last four months of 1997, paring its deficit for the
year to $3.4 billion baht, or 2.1 percent of GDP.
Central bank governor Chaiyawat Wibulswasdi said Thailand was
likely to post current account surpluses in the coming months as
exports surged and imports dropped substantially due to sluggish
local demand.
The Malaysian ringgit was sharply higher at 4.3050/150 to the
dollar against 4.6050/6350 late on Tuesday as U.S., European and
Japanese banks unwound their long dollar positions, triggering
stop-loss dollar sales.
"We may be in for a sharp retracement after recent
overshooting," a European bank dealer in Singapore said.
Dealers said the ringgit's moves were difficult to predict due
to a very thin market.
The Singapore dollar was firm at 1.7470/1.7520 to the U.S.
dollar, off its early highs, but well up from 1.7735 late on
Tuesday as the stock market surged 7.50 percent to close at
1,243.27.
Reassuring words about Singapore banks' bad loan exposure in
the region also put a shine on the domestic dollar, but dealers
said it faced a strong barrier at 1.7250.
Deputy Prime Minister Lee Hsien Loong told parliament there
was no danger of a banking crisis in Singapore and he did not
expect higher interest rates to hurt the economy significantly.
The Philippine peso continued its rally as the improved
performance of neighboring currencies gave an added boost to the
central bank's recent indirect interventions in the swap market.
The peso was at 42.00/43.00 to the dollar against Tuesday's
43.62 close.
The South Korean won firmed to 1,660 to the dollar from
Tuesday's 1,682 close, buoyed by foreign inflows to the stock
market and news that Korea's two main labor groups had agreed to
join a committee to discuss industrial restructuring.
The Taiwan dollar also fell off its highs as the yen lost some
ground, but it remained firm at T$34.093/100 to the U.S. dollar
from a previous T$34.365 close.
The Hong Kong dollar recovered from its early weakness and
interest rates eased as the blue chip Hang Seng Index headed
further north.
Even the Australian and New Zealand dollars perked up as
spirits rose across much of Asia.
Only the Indian rupee bucked the trend, finally falling
through the psychological 40.00 level to the dollar, prompting
intervention by the central bank in spot and swap markets.
The following table shows the drop in value of Asian
currencies since the crisis began in July. Currency movements are
in percentage terms and reflect the local unit's fall against the
dollar, not the dollar's rise.
Currency Current value Move since July 1.
-------------------------------------------------------
Indonesian rupiah 7,000.00 -65.26%
Thai baht 53.00 -51.13%
Korean won 1,660.00 -46.51%
Malaysian ringgit 4.32 -41.67%
Philippine peso 42.00 -36.90%
Taiwan dollar 34.09 -18.60%
Singapore dollar 1.75 -18.24%
Hong Kong dollar 7.74 -0.03%
Indian rupee 40.17 -10.83%