Asian currencies pare losses
Asian currencies pare losses
SINGAPORE (Reuters): Most Asian currencies erased their losses late yesterday as the Malaysian ringgit suddenly rebounded, spurring widespread profit-taking on the U.S. dollar's earlier rise.
Malaysian Finance Minister Anwar Ibrahim's announcement of a series of measures aimed at curbing the current account deficit prompted a near five percent rise in the ringgit to the 3.6950 per dollar level in thin afternoon trade, dealers said.
Kuala Lumpur stocks also rallied, with the key index ending 5.47 percent higher at 607.40 after Anwar told a news conference the government would cut spending and squeeze credit as part of a "major" package to restore confidence in the economy.
The ringgit had earlier hit an all-time low of 3.8650 to the dollar as players betted against the government coming up with concrete measures to bolster investor sentiment.
"The whole string of measures by Anwar has assisted the ringgit," said Ishak Ismail, market intelligence analyst at I.D.E.A.
Anwar also said the government's estimate of 1998 gross domestic product growth (GDP) had been cut to between four and five percent, from an earlier forecast of seven percent.
Singapore dealers said the ringgit's recovery was inspired partly by talk that the central Bank Negara Malaysia had been checking rates near the ringgit's lows.
"With all these comments from Anwar, the market got a bit nervous and there was a lot of unwinding of positions," a U.S. bank dealer said.
"They're talking about slower growth, which is not positive. But the steps they're taking to address the economy should be quite positive," he said.
The dealer added, however, that the ringgit's rise was likely to be confined to the 3.6500 per dollar level, as much of its recent weakness was fueled by dollar demand from Malaysian companies.
"There's not much speculation in the ringgit these days. It's mainly actual corporate demand for dollars from companies which have to make a lot of interest payments in dollars."
The ringgit's recovery helped rescue the Singapore dollar from fresh 52-month lows of 1.6250 to the U.S. dollar. It stood at 1.6100/10 at 0930 GMT.
The Indonesian rupiah also clawed back from the depths and was quoted at 3,950/60 to the dollar against a low of 4,020.
Dealers said Bank Indonesia had intervened intermittently but its efforts were largely shrugged off in the face of strong corporate dollar demand.
Activity in the Thai baht was thinned by a public holiday in Thailand celebrating the King's birthday.
Offshore rates firmed to 41.20/25 at 0930 GMT against 41.60/41.70 in late Thursday trade.
Dealers said Monday's expected decision over the future of Thailand's suspended finance firms lent some support.
The Philippine peso slipped to 35.13/23 to the dollar versus 35.055 on Thursday, but activity was muted.
In north Asia, euphoria over Thursday's news of a massive IMF- led rescue package for South Korea proved short-lived and the won was dragged down by dollar short-covering and foreign exchange debt repayments.
It ended at 1,230.00 to the dollar against Thursday's 1,170.00.
Taiwan's dollar held firm, aided by exporters' U.S. dollar sales and some foreign fund inflows in the wake of the IMF bail- out for South Korea.
It ended at T$31.75 to the U.S. dollar against a finish of T$31.90 on Thursday.
Central bank deputy governor Hsu Chia-tung said the rebound showed investors had regained confidence in the Taiwan dollar.
The Hong Kong dollar was largely untouched by the volatility elsewhere, ranging between 7.7350/90 to the U.S. dollar against its 7.7372/82 close on Thursday.
Dealers said the Hong Kong Monetary Authority (HKMA) was seen offering short-dated dollar forwards. They expected the HKMA to continue adding liquidity to the interbank market to feed year- end demand for cash.