Asian currencies firm while baht sparkles
Asian currencies firm while baht sparkles
SINGAPORE (Reuters): Asian currencies were mostly firmer yesterday as Thailand's efforts to resuscitate its economy spread cheer across the region.
"All the regional currencies are strengthening. A lot more funds are coming into the region and the baht is taking the lead," a regional currencies dealer in Singapore said.
Dealers said the market was heartened by Thailand's announcement of a series of modest new economic targets and austerity steps aimed at pulling the country out of its crisis.
On Tuesday, the Thai government raised taxes on gasoline and luxury goods to demonstrate its commitment to a tough reform program prescribed by the International Monetary Fund.
It also said gross domestic product was expected to contract 3-3.5 percent in 1998 while the current account was expected to post a surplus of 3.9 percent of GDP.
"There's been a lot of selling interest in dollars for baht from U.S. investment houses," a U.S. bank dealer in Singapore said. "But on the way down, there's buying interest from Thai corporates so I can't see dollar/baht going back to 41.00".
The Malaysian ringgit had a volatile session, trading between 3.70 and 3.82 to the dollar in thin markets, as comments by Prime Minister Mahathir Mohamad pared optimism over the government's plans to adjust a policy of granting preferences to ethnic- Malays.
Mahathir said a plan to allow ethnic-Malays to sell their equity stakes to other races in the country was a temporary measure to revive troubled companies, the national Bernama news agency reported.
The ringgit had rallied sharply on Tuesday after government economic adviser Daim Zainuddin said Kuala Lumpur was willing to let non-ethnic Malays buy into companies.
Across the border, the Singapore dollar was driven by its neighbor's fortunes, though at a more subdued pace.
Dealers said the market brushed off a downward revision in the government's 1998 growth forecast to 2.5-4.5 percent from a previous five to seven percent, as it was widely expected.
They said the Singapore dollar was benefiting from the firmer tone in regional currency markets and expectations the government would unveil a pro-growth budget on Friday.
The Indonesian rupiah remained mired in confusion over the government's proposed currency board system as a new team of IMF economists arrived in Jakarta to review progress on economic reforms before the Fund's next disbursement.
Jakarta dealers said there was almost no trade there as offshore banks had cut credit lines to their domestic counterparts due to the uncertainty.
Dealers in Singapore said volume in rupiah trade had shrunk because the Indonesian government was not making a clear decision on the currency board issue immediately.
"I don't know how long the market can wait. But once confidence diminishes, people are starting to unload rupiah again," one said.
The Philippine peso gained from the strength in regional currencies and a lack of corporate dollar demand. Its rise lifted Manila stocks, causing the main index to end 2.52 percent higher at 2,153.70.
In north Asia, the Taiwan dollar ended higher on foreign fund inflows and investor optimism over the planned appointment of a new central bank governor known for strongly defending the local currency.
Dealers attributed its rise to the government's decision to appoint Perng Fai-nan as the new governor to succeed Sheu Yuan- dong, who was killed in an air crash.
The South Korean won edged higher as banks unloaded dollars on expectations of month-end exporter sales.
Dealers said the inauguration of President Kim Dae-jung had hardly any impact on the market.
The Hong Kong dollar firmed a notch while forwards eased on speculation that banks might soon cut prime rates.