Asian currencies in limbo ahead of Jakarta meeting
Asian currencies in limbo ahead of Jakarta meeting
SINGAPORE (Reuters): Asian currencies were firm against the U.S. dollar but the market was trapped in limbo yesterday ahead of an ASEAN finance ministers meeting in Jakarta on Friday.
"The market is almost at a standstill. No one dares to take any fresh positions ahead of the Jakarta meetings and the Singapore budget announcements. They are just squaring their positions," said a senior dealer with a European house.
Singapore is due to announce its budget on Friday, but the fate of most Asian currencies lies in the hands of Indonesia, again in limelight with various meetings scheduled.
On Wednesday, a new team of IMF officials arrived in Jakarta to review Indonesia's economic reform program.
On Thursday, the International Monetary Fund representatives met President Soeharto and there was also a meeting between lenders and indebted Indonesian companies to resolve the country's $74 billion private foreign debt.
Earlier in the day, Finance Minister Mar'ie Muhammad met with parliament to finalize the revised 1998/99 budget.
On Friday, finance ministers from the nine ASEAN (Association of South East Asian Nations) member states will hold a two-day meeting in Jakarta.
ASEAN comprises Indonesia, Malaysia, Singapore, Thailand, Vietnam, Philippines, Brunei, Myanmar and Laos.
Soeharto seems still undecided on implementation of the fixed exchange rate regime of the CBS, which has seen widespread international criticisms.
The Indonesian rupiah firmed amid caution about the possible outcome of talks between the IMF and Indonesian officials.
"The market doesn't want to second-guess what's going through. The main issue will be the currency board system so there's been some liquidation of long dollar positions by offshore funds," the head of regional currencies at a European bank in Singapore said.
He said there was little dollar demand from Jakarta and the relative stability of the rupiah was supporting other currencies in the region.
Elsewhere, the Singapore dollar gained from optimism the government would unveil a pro-growth budget on Friday and from foreign fund inflows to the stock market.
"The Sing dollar is benefiting from the budget hopes. There'll probably be good incentives for the financial services sector and that should help the stock market and Sing dollar," the European bank dealer said.
Dealers said dollar/Sing could see strong support at 1.6180 and resistance at 1.6400 in the near-term.
The Singapore dollar was underpinned by the government's measures to develop its bond and fund management markets.
The Malaysian ringgit strengthened against the dollar on fresh demand after Deputy Prime Minister Anwar Ibrahim said Malaysia would further liberalize equity ownership by foreigners.
"The market reacted positively to Anwar's comments and we saw offshore funds buying ringgit," said a local dealer.
The Thai baht firmed in late trade on offshore investor demand ahead of the release of key economic data from the Bank of Thailand on Friday, dealers said.
The Philippine peso also firmed on dull corporate dollar demand.
In north Asia, the Taiwan dollar welcomed the appointment of a new central bank governor, Perng Fai-nan, and surged to its highest level in 10 weeks.
The South Korean won slipped on news the finance ministry had decided to revoke the business licenses of two merchant banks and political wrangling over the parliamentary confirmation of Kim Jong-pil's appointment as prime minister.
The Hong Kong dollar was steady while forwards looked soft as interest rates remained low, giving a boost to the stock market.
The blue chip Hang Seng Index surged 3.11 percent to end well above 11,000 to 11,224.78.