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.