Asian currencies fall after rupiah, won dive
Asian currencies fall after rupiah, won dive
SINGAPORE (Reuters): Asian currencies were dragged to new
record lows yesterday, hurt by the rising prospect of corporate
bad debts and sharp falls in the Indonesian rupiah and South
Korean won, dealers and currency experts said.
The rupiah led the flight into U.S. dollars on rumors about
President Soeharto's health, later denied. It sank almost 11
percent on the day, plunging to a historic low of 4,600 against
the dollar.
Dollar/rupiah slipped 450 points from its opening at 4,150 to
4,550/65 in late action.
State Secretary Moerdiono and Soeharto's son denied the market
rumors and said the 76-year-old president was in good health.
The rupiah's plunge was its largest ever one day fall,
outstripping the 155-point spiral in August when the central bank
scrapped its intervention band.
"It's not so much a contagion effect now. The fact currencies
are all under pressure is because they're facing similar
problems, which is corporate debt hedging," said Andrew Fung,
regional treasury economist with Standard Chartered.
He said the rupiah was under attack because of the extent of
corporate debt in Indonesia, which happens to coincide with
mounting loan problems in South Korea.
The Korean won plummeted to its daily lower limit for the
second consecutive session, adding to overall defensive actions
in foreign exchange markets.
The won nosedived to a record low of 1,465.7 against the
dollar after the Finance Ministry released documents to the
International Monetary Fund (IMF) revealing that foreign reserves
were a paltry $6 billion on Dec 2.
Dealers said strong bids for dollars against the won were in
the market from the opening bell and a weak Japanese yen
compounded the won's problems.
Thailand's baht slipped in tandem, encouraged by corporate
demand for dollars to meet year-end requirements.
Onshore, the baht was quoted at 42.300/500 per dollar at 1000
GMT against 41.70/90 late on Monday.
Offshore, the rate slipped to 42.300/600 per dollar against
41.20/30 previously.
"The market is thin and choppy with the downside bias caused
by external worries and rumors," said Alison Seng, an analyst
with Standard & Poors/MMS.
She said the market was expecting lower levels in rupiah and
won, which would set near-term direction for the baht.
The usually more resilient Singapore dollar also lost its
footing, hit by a shock fall in the cost of permits to buy big
cars and the rupiah's slide.
"The Sing dollar reacted to the rupiah's weakness because
Singapore gave a loan of US$5 billion (to Indonesia), a large
amount for a small country," said a senior dealer with a Japanese
bank.
He said the confidence crisis in Indonesia would create more
jitters about that loan.
The Singapore dollar flirted with new lows at 1.6275 against
the U.S. dollar before paring losses to stand at 1.6255/75.
Dollar/sing was quoted at 1.6175/90 late on Monday.
The Malaysian ringgit's recovery was stopped in its tracks by
the shakeout of the rupiah and won to stand at 3.6550/650 from an
earlier level of 3.5800 and Monday's close of 3.6500/00.
Dealers said the ringgit remained supported by new austerity
measures announced on Friday to turn the economy around.
Falls in the ringgit were seen temporarily capped at 3.70.
Taiwan's dollar was moderately lower against the dollar,
tracking falls in the Korean won. It was quoted at T$31.961/995
against the U.S. dollar late yesterday compared with Monday's
31.900 close.
The Hong Kong dollar weakened on overseas selling but managed
to close above the session's low.
It was quoted at 7.7400/10 against a prior 7.7373/7.7383.