Asian currencies fret as won, rupiah plummet

Asian currencies fret as won, rupiah plummet

SINGAPORE (Reuters): Thin year-end trading, South Korea's
economic woes and renewed worries about Indonesian President
Soeharto's health sent Asian currencies spiraling to new lows
yesterday.

Foreign exchange traders were quick to move their targets
higher for the U.S. dollar as beleaguered Asian currencies
skidded below previous forecasts in markets characterized by wide
spreads and thin volumes.

In South Korea, the won opened at its daily limit-down of
1,891.4 to the dollar, prompting forecasts of a repeat of the
last four sessions in which the won has lost 10 percent daily.

Worries about shrinking foreign reserves, news a securities
company had applied for court receivership and a delay in state-
run Korea Development Bank's US$2 billion Yankee bond issue all
looked set to undermine the won on Friday.

But the central bank immediately intervened and continued to
sell dollars through the day, eventually bolstering the won to a
higher close of 1,710 to the dollar from Thursday's 1,719.8.

The South Korean Finance Ministry said usable foreign reserves
were expected to reach $3.2 billion at month-end, above the $2
billion level Korea had agreed with the International Monetary
Fund (IMF).

But currency traders remained anxious about Seoul's ability to
meet short-term debt obligations due by December.

Worries about South Korea's ability to meet short-term debt
obligations have fueled the won's descent in recent sessions and
analysts believe the IMF's $57 billion aid package will not be
enough to plug the gap.

"I personally think they ought to show people a figure of $100
billion all in. I think that would make the market comfortable
because it is exactly the sum of the short-term foreign currency
debt," said Daniel Lian, head of Asian markets research at ANZ in
Singapore.

The Taiwan dollar ended sharply off at T$32.321 to the U.S.
dollar against Thursday's T$31.90 close.

Dealers said the central bank had intervened moderately in
late trade, pulling the Taiwan dollar up from a low of T$32.599.

The Hong Kong dollar slipped to the key 7.75 level to the U.S.
dollar in late trade, but failed to breach it amid rumors of
intervention by the Hong Kong Monetary Authority (HKMA).

An HKMA spokesman declined to comment on the rumors.
Hong Kong Financial Secretary Donald Tsang said there had been
"absolutely no" speculative pressure on the Hong Kong dollar this
week and activity in the forward market had been caused by
hedging.

But dealers said at least three U.S. investment banks had been
heard short-selling the Hong Kong dollar in the forward market
this week, and more selling was seen from Singapore.

News that Soeharto would not attend an informal regional
summit in Malaysia next week -- two days after Jakarta said he
would -- propelled Indonesia's rupiah through the key 5,000
barrier against the dollar.

It stood at 5,120/00 at 1020 GMT after hitting a low of 5,225,
down over 11 percent from its opening 4,640/80.

Dealers said Soeharto's cancellation of his trip had revived
fears about his health, which sent the rupiah to record lows
earlier this week.

In Thailand, Prime Minister Chuan Leekpai and senior
government officials tried to calm nerves as the baht plunged to
record lows of round 45.60 to the dollar, its woes worsened by
the rupiah's late afternoon panic.

The baht was at 45.05/35 to the dollar onshore at 1020 GMT,
down over four percent from 43.50/43.60 on Thursday afternoon.

The Philippine peso slid from the open, breaching its third
volatility band within the first 90 minutes of trade at 37.36 to
the dollar. It ended at that level, a drop of more than two
percent from Thursday's 36.585 close.

Trade was virtually suspended for the day as banks were not
permitted to push the peso below 37.36 and few players were
willing to sell dollars at that rate.

Even the stolid Singapore dollar was brought down by the
mayhem elsewhere. It fell through the 1.6500 level in late trade,
hitting 58-month lows of 1.6530 against levels of 1.6325/40 late
on Thursday.

The Malaysian ringgit toyed with lows of around 3.81 to the
dollar, but recovered to 3.7900/00 as players liquidated long
dollar positions above the 3.80 level.

Some dealers said the ringgit's stability was temporary and it
was likely to revisit its all-time low of 3.865 next week.