Asian central bankers fail to boost currencies

Asian central bankers fail to boost currencies

SINGAPORE (Reuters): Asian currencies shuffled about in largely familiar ranges yesterday as traders found little to entice them in a raft of comments by regional central bankers attending the Asian Development Bank (ADB) meeting in Geneva.

The Indonesian rupiah remained in negative territory despite government promises of continued high interest rates and commitment to economic reform.

Finance Minister Fuad Bawazier promised to put Indonesia's economy on the road to recovery and said he was reasonably confident inflation would be contained at 40 percent for 1998 as a whole despite a rate of 24.7 percent in the first quarter.

Earlier, economic tsar Ginandjar Kartasasmita said the rupiah should regain the 6,000 per dollar level this year if economic reforms remain on track, and expressed confidence this would be the case.

He said fuel and electricity prices would go up in May and all subsidies, except for rice and soybeans, would be abolished by October 1 as per the IMF agreement.

But dealers said growing social tensions and news Indonesia would probably receive an already delayed disbursement of IMF money in installments weighed against the rupiah.

Elsewhere, the Philippine peso remained below 40 to the dollar, a victim of pre-election jitters, despite the central bank's move to hike key overnight rates by 50 basis points each to curb speculative pressure on the peso before the May 11 poll.

Central bank governor Gabriel Singson warned currency speculators that the peso would bounce back and strengthen to levels more in line with the economy's relatively good position.

Finance Secretary Salvador Enriquez told Reuters Television he expected the peso to trade between 37 and 40 to the dollar in the long term.

The ringgit nudged towards the higher end of its recent 3.70- 3.80 range against the dollar after Malaysia said it was willing to consider allowing foreign companies to own up to 61 percent of local telecommunication firms as long as the funding for the increase was sourced overseas.

Telecommunications Minister Leo Moggie said foreign companies that increased their stakes above that level would have to reduce their holdings back to 49 percent within five years.

The news helped the ringgit recover some of the losses fueled by Singapore's denial of rumors it had agreed to buy land owned by Malaysia's state railway company for 30 billion ringgit.

Prime Minister Mahathir Mohamad's rejection of an IMF call for higher Malaysian interest rates failed to dent the ringgit earlier.

In South Korea, the won was firm but came off a high of 1,326 to the dollar as private and state-run companies aggressively tried to hedge their dollar exposures in forward trading on a belief the equilibrium for the exchange rate was at 1,350/1,400.

News of soaring inflation and falling export and import prices -- yet more worrying evidence of the impact of the currency crisis -- did not help the market.

The producer price index jumped 17.5 percent year-on-year in April, against a 3.8 percent rise the year before. The consumer price index was up 8.8 percent year-on-year in April against 4.3 percent the year before.

The Thai baht was soft as traders turned apprehensive about pushing it higher amid signs the government might not want it to strengthen further.

Deputy Prime Minister Supachai Panitchpakdi said overnight he was happy with an exchange rate of 40 to the dollar.