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.