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.