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.