Asia currencies tread water as rupiah teeters
Asia currencies tread water as rupiah teeters
SINGAPORE (Reuters): Asian currencies made a shaky start to
the week amid growing tension between Indonesia and the
International Monetary Fund and confusing policy signals out of
Jakarta.
Indonesia's troubles depressed currency and stock markets
across Asia as traders fretted about the possible repercussions
of the IMF pulling out of Indonesia in the face of the
government's persistent failure to meet prescribed economic
reforms.
President Soeharto on Sunday questioned the suitability of the
reforms, tied to Indonesia's $43 billion IMF-led bail-out
package, throwing up differences between the fund and the crisis-
ridden country.
The IMF said on Friday its board would not discuss Indonesia's
reform program before April, effectively delaying the fund's next
disbursement of $3 billion, which was due this month.
The IMF's country representative in Jakarta, Kadhim Al-Eyd,
said yesterday the fund was continuing its reform review talks
with the government and hoped they would be concluded soon after
a new cabinet is in place following Soeharto's re-election on
Tuesday.
The rupiah pulled back from its early lows of around 12,500 to
the dollar, but dealers said trade was very thin and spreads wide
because most traders opted to stay away from the currency.
Continuing talk Jakarta might soon resort to a fixed-rate
system to stabilize its rupiah plagued the market, causing
trading at most regional currency desks to wind down in the
afternoon.
"People have lost a bit of money on Friday and today as well.
So they just want to stay aside," a U.S. bank dealer in Singapore
said.
Bambang Trihatmodjo, one of Soeharto's sons, said on Sunday
Indonesia planned to go ahead with IMF reforms, but added that
the government would announce a fixed rate for the rupiah soon
after the swearing-in of his father for a seventh five-year term
on Wednesday.
Elsewhere in Southeast Asia, the Malaysian ringgit remained
weak but off its lows after diving through four to the dollar in
early trade.
Dealers said the ringgit should find support from dollar sales
near the 4.10 level for the time being, but they added that the
dollar looked well bid at 4.00.
The ringgit has been troubled by fears about the health of
Malaysia's financial sector since the central bank announced last
week that four institutions needed fresh injections of capital to
restore them.
The Thai baht held up relatively well as the market looked
favorably at Thailand's efforts to abide by IMF reforms.
Criticism of the central bank for its handling of the
financial crisis was having little impact on the baht because it
came as no surprise to the market, dealers said.
Thai Finance Minister Tarrin Nimmanahaeminda said investors
and credit rating agencies could differentiate between the
problems faced by Thailand and Indonesia.
"I believe credit rating agencies can differentiate markets
even though regional currencies have retreated sharply," he told
reporters amid concerns the baht could be hurt by contagion from
the rupiah.
Weaker regional currencies also hurt the Philippine peso but
traders said its fall would be limited to 40.50 per dollar
because of a lack of corporate dollar demand as many companies
have already met their requirements in January and February.
In north Asia, the Taiwan dollar was depressed by the region
and news of a rare trade deficit for February, which was seen as
increasing depreciation pressures on the domestic currency.
The South Korean won strengthened as foreign investors turned
net buyers of Seoul stocks after Friday's sell-off.
The Hong Kong dollar was steady while forwards shed early
gains on position squaring as the rupiah paused in its slide.