Asian currencies claw back after traumatic week
Asian currencies claw back after traumatic week
SINGAPORE (Reuters): Asian currencies were trading quietly yesterday at the end of a traumatic week, with many managing to creep higher as traders covered short positions taken out during the past few days.
The Indonesia-inspired mini-panic pushed some regional currencies back to levels not seen since the middle of March and traders are still closely watching events there.
There have been reports of at least two deaths in the Sumatran city of Medan, and demonstrators calling for the resignation of President Soeharto and political reform have fought pitched battles with the military.
The rioting escalated after subsidies on domestic fuel and gasoline were lifted, leading to price rises of between 25 and 71 percent. Around mid-week the currency markets began to get extremely jittery about the situation and there was a rupiah-led rout of the regional currencies.
"The situation remains very tense and the government's moves remain closely watched," said Thio Chin Loo, strategist at Paribas.
"We remain skeptical that a change in government will provide a solution to Indonesia's current problems, as there is no other credible party to succeed the present team, and if Indonesia were to adhere to the International Monetary Fund reform program there is little alternative other than to make the necessary adjustments now."
U.S. Treasury Secretary Robert Rubin urged Indonesia to show restraint in dealing with social unrest but the military has said it will be tough on protesters.
Dollar/rupiah managed to edge up to 8,500 per dollar at one point but finished closer to 9,000. More riots will see it on the wrong side of 10,000 in short order, dealers said.
Monday is a public holiday in Indonesia and also the day President Soeharto leaves the country for a summit meeting of 15 developing countries followed by a formal state visit to Egypt.
He was last out of the country in November for the Asia- Pacific Economic Cooperation (APEC) meeting in Vancouver.
Debt talks between the Indonesian government and creditors started yesterday in Tokyo.
The meetings will look at ways of rescheduling outstanding loans, but significant announcements are not expected and the social and political instability are likely to overshadow the meeting.
The Philippine peso ticked up as the country got ready for Monday's presidential election. At one point it moved to the 39.30 per dollar level.
Victory for Vice-President Joseph Estrada, a former movie star, is pretty much discounted and he is way ahead in opinion polls, but there are 10 candidates standing to replace Fidel Ramos.
The baht, which has held up well in the teeth of this week's sell-off, edged a little lower but dealers said overseas players are still looking to pick up baht to get involved in new issues of stock and the planned $5.0 billion sovereign issue.
The ringgit moved ahead and even managed to get through the 3.80 per dollar level as worries about tighter monetary policy faded, although the easier stock market was holding it back.
In north Asia the Korean won firmed more than 1 percent to around the 1,385 per dollar level after a sharp sell-off during the week on worries about the threatened strike action by disgruntled workers.
The Singapore dollar continued to look sickly amid the worries over its close neighbor Indonesia, and in Taiwan the dollar there edged a little lower in quiet trading.
Markets in Singapore, Malaysia, Jakarta, and Thailand are all closed on Monday for a holiday. The Philippines is also closed on Monday for the presidential election.