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.