Asian currencies depressed, intervention supports rupiah

Asian currencies depressed, intervention supports rupiah

SINGAPORE (Reuters): Depressed Asian currency markets largely
ignored Indonesia's revised, IMF-endorsed 1998/99 budget, driving
the rupiah to seek refuge in the arms of the central bank.

Dealers said the budget, which included a forecast of zero
economic growth, inflation at 20 percent and a rupiah rate of
5,000 to the U.S. dollar, contained no surprises and left the
market anxious about the unresolved issue of corporate debt.

"The market is not focusing so much on the budget revisions.
It's just a theoretical exercise. What they want to see is how
the government is going to cope with the debt restructuring,"
said the head of regional currencies trading at a European bank
in Singapore.

Dealers said intervention by Bank Indonesia in a very thin
market, characterized by spreads as wide as 1,000 rupiah, was
practically the only thing keeping the rupiah out of the depths.

The Indonesian central bank was believed to have sold dollars
for rupiah at the 14,000 level and its repeated rate checking in
Singapore and Jakarta kept traders on their toes.

"The demand for dollars from Jakarta is still very strong."
Banque Paribas said emergency Indonesian action to deal with the
country's private sector debt crisis might be on the cards.

"What this implies for the currency market is that liquidity
will likely dry up as the currency overshoots to unbelievable
levels, and wide spreads could see offers reach 20,000," it said
in a daily commentary.

Indonesia's troubles continued to weigh on other Asian
markets, but the effect was more muted as activity wound down
ahead of next week's holidays for the Lunar New Year and Islam's
Eid al-Fitr.

Dealers began to view the rupiah more as an isolated disaster.
The Philippine peso, an island of relative calm in recent
sessions, succumbed to mounting pressure from the region and fell
far enough to trigger a market rule that effectively suspends
trading for the day.

Manila traders said no central bank presence was detected and
even foreign banks, which were actively selling dollars recently,
had stopped doing so.

The Malaysian ringgit was weak at 4.5100 to the U.S. dollar,
against 4.5325 late Thursday, but activity was confined to a
subdued range with dollar bids around 4.45/50.

The Singapore dollar slipped to 1.7635 to the U.S. dollar,
against Thursday's 1.7500, but dealers said it looked well
supported around 1.7700 for the time being.

"There's ringgit/Sing selling from the 0.3900 level and also
flight-to-quality buying (of the Singapore dollar) from
Indonesia," a dealer said.

The Thai baht dipped to 54.65 to the dollar onshore from 54.45
on Thursday as the market awaited details of talks between Thai
Finance Minister Tarrin Nimmanahaeminda and the IMF on a review
of Bangkok's bailout package.

In north Asia, the Seoul won outshone its regional
counterparts, firming to 1,745 per dollar versus Thursday's 1,760
close on strong cash demand ahead of the Lunar new year
festivities.

But dealers said its rise would be blocked by dollar demand
from importers and banks with month-end debt servicing needs.

The Taiwan dollar sagged below the T$34.00 level from
Thursday's 33.706 close as worries about the region triggered
dollar demand from importers ahead of the new year break.

The Hong Kong dollar slipped to HK$7.7430 from a previous
7.7385 close as local interest rates eased.

The Australian dollar held above a support level of US$0.6560
but failed to make much headway due to fears about the rupiah.

The Indian rupee firmed to 38.65 per dollar as the impact of
the central bank's measures to tighten liquidity overshadowed the
potential contagion effect of other Asian currencies.

The following table shows the drop in value of Asian
currencies since the crisis began in July. Currency movements are
in percentage terms and reflect the local unit's fall against the
dollar, not the dollar's rise.

Currency Current value Move since July 1

--------------------------------------------------------

Indonesian rupiah 13,000.00 -81.29%

Thai baht 54.75 -52.69%

Korean won 1,744.00 -49.08%

Malaysian ringgit 4.52 -44.25%

Philippine peso 43.80 -39.50%

Singapore dollar 1.76 -18.80%

Taiwan dollar 33.93 -18.20%

Indian rupee 38.64 -7.31%

Hong Kong dollar 7.74 0.01%