Asian currencies gain from dollar's decline against yen
Asian currencies gain from dollar's decline against yen
SINGAPORE (Reuters): Asian currencies made slow gains yesterday, helped by the U.S. dollar's fall against the yen, but Indonesia's troubles remained a blot on the horizon.
Worries about spiraling food prices and potential unrest in Indonesia ahead of next week's presidential elections continued to hamper trade, dealers said.
Data released yesterday showed month-on-month inflation jumped 12.76 percent in February after a 6.88 percent rise in January. Food prices rose 16.07 percent in February.
But the rupiah held up above 9,000 per dollar, largely due to traders' reluctance to commit themselves in the face of continuing uncertainty over Jakarta's plans to stabilize the rupiah via a proposed currency board.
President Soeharto said on Sunday economic reforms prescribed by the International Monetary Fund were not working and more drastic plans were needed in view of the worsening crisis.
He said he had asked the IMF and heads of other governments to help Indonesia find a more appropriate alternative, which he called "IMF-Plus".
Steve Hanke, Soeharto's special adviser, said on Saturday that the current IMF package had been a "total failure".
He said he and Soeharto envisaged more broad-based reforms including large-scale privatization of state firms, adopting the currency board and setting up a new bankruptcy code.
Dealers said trade in the rupiah had practically dried up with no interbank market to speak of, and interest was likely to be further dampened before the elections end on March 11.
"I think the rupiah will keep to an 8,300-9,100 range before March 11. Liquidity is thin...the amounts are small but losses can be large if the market moves against you," said Ishak Ismail, market intelligence analyst at I.D.E.A.
Elsewhere, the Malaysian ringgit posted healthy gains, but failed to clear the 3.60 per dollar barrier after benefiting from dollar sales by exporters and interbank players near 3.65.
Bullish technical indicators, a strong stock market and a slowdown in loan growth in January all supported the ringgit, dealers said.
Across the border, the Singapore dollar edged higher with the ringgit as traders absorbed the details of Friday's budget.
They said disappointment over the lack of a widely-sought corporate tax cut would limit the Singapore dollar's gains to 1.61 per U.S. dollar.
But it was not expected to slide sharply as the budget, which showed a conservative fiscal approach, was seen as positive for Singapore in the longer term.
The Thai baht gave way to dollar demand from domestic companies and offshore players as the country's four opposition parties submitted a no-confidence motion against Prime Minister Chuan Leekpai's government for alleged economic mismanagement.
Chuan said cash-strapped South Korea and Indonesia cannot fulfill their promises under an IMF-brokered rescue package to Thailand and it was now up to the Fund to look for other sources to meet the shortfall.
The Philippine peso firmed as foreign funds re-entered the stock market, but gains were limited by expectations of corporate demand for cheaper dollars.
Manila's composite stock index ended 14.26 points higher at 2,280.56 after racking up more than 130 points last week.
The South Korean won firmed above 1,600 per dollar on heavy foreign stock buying and news the customs-cleared trade account had turned to a surplus of $3.29 billion in February from a $2.12 billion deficit a year ago.
A Korea Stock Exchange official said foreign net buying in Seoul stocks reached an all-time high of 2.18 trillion won in February, up from 1.69 trillion won in January.
But traders said a parliamentary stalemate over the appointment of prime ministerial nominee Kim Jong-pil could hamper Korean financial markets.
The Taiwan dollar ended firm but below the T$32.00 level as late U.S. dollar demand from importers undermined some of its gains from the yen's strength and inflows to the stock market.
The Hong Kong dollar was steady and forwards slipped as major banks unloaded funds into the interbank system in anticipation of a further fall in interest rates.
Dealers said they were still expecting a rate cut despite the Hong Kong Association of Banks' decision to leave savings rates unchanged last Friday. Banks also refrained from changing the 10.25 percent prime lending rate.