Asian currencies get pounding on first day
Asian currencies get pounding on first day
SINGAPORE (AFP): Asia's troubled currencies received a
pounding on the first day of 1998 trading yesterday as regional
financial turmoil entered its seventh month with no relief in
sight, dealers and analysts said.
The Malaysian ringgit, Philippine peso and Thai baht were sold
down to new record lows against the U.S. dollar while the
Indonesian rupiah skirted the sensitive 6,000 level.
The fresh weakness came amid market jitters following warnings
by regional leaders in new year messages that their economies
would get worse in 1998 before any recovery.
"The rupiah weakness caused the other currencies to fall in
the morning while in the evening, the ringgit dictated play,"
said Nizam Idris, analyst with British financial house I.D.E.A.
The ringgit dived to an all-time low of 3.9525 against the
U.S. dollar even as Kuala Lumpur moved to streamline financial
institutions following a rapid decline of its currency, which had
closed Gedoesday at 3.8750. There was no currency trading on
Thursday because of the New Year holiday.
"The market perception is that some of the mergers could be
forced upon (financial institutions)," Nizam said.
Malaysia's Hong Leong Bank Bhd. announced Friday it had
received the central bank's approval to commence talks with
property group Bolton Bhd. to acquire its finance arm.
The greenback has appreciated against the ringgit by more than
50 percent since July 2 when Thailand ran out of reserves and
allowed its baht to fall freely, triggering a regionwide currency
turmoil that overwhelmed Asian economies.
South Korea was the last key economy to be hit by the turmoil
and is now under intensive care by the International Monetary
Fund.
Dealers said the catchword when markets opened Friday after
the New Year break was "just buy the US dollar when it dips."
"The markets took the opportunity to sell the Asian currencies
after hearing leaders in their New Year messages warning their
people that things could turn for the worse before they become
better," said Alison Seng, analyst with U.S. research house
Standard and Poor's MMS in Singapore.
Among those who painted a grim 1998 scenario was South Korean
president-elect Kim Dae-Jung who said Thursday that his country
was facing its most difficult time since the Korean War. He
warned that many more companies would fall before Seoul's
economic crisis was over.
The closely-watched South Korea won was not traded actively
Friday because of a Korean holiday. The won, traded on a non-
deliverable forward basis outside South Korea, had closed
Wednesday at 1,750 against the greenback.
Indonesia's President Soeharto told his people in a new year
message to understand the need for tough, unpopular government
measures to overcome the country's economic woes while Thai
premier Chuan Leekpai warned that the worst had yet to come for
Thailand.
The rupiah closed lower at 5,850/5,925 against the dollar from
Wednesday's close of 5,450 while the Thai baht offshore ended at
a record low of 48.05 from 46. 75.
Nizam of I.D.E.A. said the market sold the rupiah also because
it felt Indonesia's draft budget to be unveiled by President
Soeharto on Tuesday was expected to lack substance.
The Philippine currency closed 2.9 percent lower at 41.05 to
the dollar after testing a new low of 41.80 to the greenback. The
peso had closed 1997 at 39.90 to the dollar.
The Singapore dollar ended lower at 1.6955 against the U.S.
dollar from Wednesday's close 1.6768 while the Taiwan dollar was
virtually unchanged at 32.64 to the greenback.
A dealer with a European bank said some funds wanted to sell
down the regional currencies during the post-new year period of
thin trading because it was easier now to move the market before
full scale trading started later next week.