Asian currencies dither on RI package
Asian currencies dither on RI package
SINGAPORE (Reuters): Indonesia's announcement of a long-
awaited IMF assistance plan gave the rupiah a slight boost on
Friday, but dealers said enthusiasm was capped by the absence of
the most keenly sought component -- a dollar amount.
Indonesian Finance Minister Mar'ie Muhammad said growth would
fall over the next two years due to reduced economic activity,
but was expected to rise again in 1999/2000.
He said the government aimed to reduce the current account
deficit to less than 3 percent of gross domestic product within
two years, to keep inflation at single-digit levels and reduce
import duties on key commodities.
The program led by the International Monetary Fund (IMF) would
be implemented over three years and the amount of help would be
announced individually by each donor, he said.
Dealers and analysts were upbeat in their initial assessment
of the package.
"It looks like Indonesia is serious about conforming to the
IMF measures," said the head of regional currencies at a European
bank in Singapore.
"Overall, the package should restore some confidence in
Indonesia but we'll have to see what the breakdown and the total
amount is," he said. "I think the rupiah's strengthening should
be limited to 3,500."
The rupiah firmed to 3,580 to the dollar on the back of the
news, from levels of around 3,625 earlier and a low of 3,685. But
Jakarta stocks lost 0.49 percent to end at 500.42 points.
Other Southeast Asian currencies were largely unmoved by
Indonesia's news, firming off their earlier lows on pre-weekend
position squaring.
The embattled baht showed no sign of halting its slide as
worries about Thailand's political problems and a mixed bag of
economic data provided little respite.
The baht was at new record lows of 41.10/30 to the dollar
onshore at 0950 GMT against 40.70/90 five hours earlier. It was
at 40.50/70 offshore against 40.28/38.
Dealers said Bangkok's failure to implement financial reforms
announced more than two weeks ago unleashed fears that Thailand
may have trouble meeting conditions for the IMF's $17.2 billion
loan package.
"They're still not pulling their act together. So they've had
a cabinet reshuffle, but what sort of powers do the new guys
have? So far we haven't seen anything," said a senior regional
currencies dealer in Singapore.
Bangkok dealers said Thai companies and importers piled into
the dollar heavily after it breached the 40.00 baht level in
early trade.
The Malaysian ringgit firmed to 3.4120/220 to the dollar from
3.4300/400 earlier but activity was subdued with many
participants out for a long weekend after Thursday's holiday for
the Hindu festival of Deepavali.
The Philippine peso ended an abbreviated trading session lower
at 35.42 to the dollar against Thursday's 35.03.
Manila traders said the central bank's half-hearted defense of
the peso did little to bolster sentiment as the Thai baht charted
fresh depths.
The Hong Kong dollar was relatively steady at 7.7310/30 to the
U.S. dollar and forwards came off sharply as the stock market
rebounded to close 2.52 percent up at 10,623.78, wiping out a
near four percent loss in early trade.
The South Korean won showed a slightly healthier tone as
finance ministry measures to curb speculation helped prop it up
after five consecutive days of record lows.
The central bank's dollar sales at the 965.00 won level in
early trade also helped cushion the won's fall, dealers said. The
won ended at 964.60 against Thursday's 964.80 close.