Asian currencies tremble on rupiah's fall
Asian currencies tremble on rupiah's fall
SINGAPORE (Reuters): Asia's battered currencies trembled
yesterday as unfounded rumors swirled about the political
situation in Indonesia.
Dealers said social unrest could not be ruled out in Indonesia
as the rupiah plunged 18 percent to a record low of 9,900 to the
U.S. dollar in early trading.
It was at 9,700 at the close of trading in Jakarta, but it was
quoted at around 10,000 in Singapore at 1017 GMT -- meaning the
currency had lost half its value against the U.S. dollar in just
five trading days.
"The whole picture is actually quite scary and stupid. The
currency is just running on its own momentum," said a regional
dealer with a Japanese bank.
"It's not just foreigners who have lost confidence in the
region, but Indonesians have also lost confidence in their own
currency.".
The Jakarta stock market collapsed, the index plummeting
almost 19 percent at one point before ending slightly better but
still 12 percent down.
Dealers said the rupiah was likely to drop yet further
following comments by U.S. Deputy Treasury Secretary Lawrence
Summers that Indonesia needed to show its commitment to reforms
agreed with the International Monetary Fund (IMF) under a US$40
billion bail-out plan.
"We are facing an absolutely critical time here because the
forex losses suffered by corporates in the year to date in 1998
are greater than in all of 1997," said William Keeling, senior
adviser for Dresdner Kleinwort Benson in Jakarta.
Elsewhere in Southeast Asia, the Malaysian ringgit ended lower
despite central bank intervention. Dealers said Bank Negara sold
dollars from 4.70 ringgit to 4.60 ringgit in morning trade after
Wednesday's sales from 4.80 to 4.60 ringgit.
The size of Thursday's intervention was not known but dealers
said it need not have been big to move rates, given the thin
market liquidity. The ringgit ended at 4.6520/50 against
Wednesday's close of 4.5900/00.
Prime Minister Mahathir Mohamad said Malaysia had no immediate
plans to impose controls on foreign exchange dealings as this
would cause a loss of confidence.
However, a forex dealer said he expected the ringgit to weaken
again rapidly to the 5.00 level given the current sentiment
against the Asian region as a whole. "We are now looking to see
whether the ringgit might test the 6.00 level."
The Thai baht remained weak at 53.30/60 to the dollar onshore
against 53.00/20 late on Wednesday, but dealers said its losses
were contained as the market awaited details of government
measures to curb currency speculation.
They said the new measures, due on Friday, were unlikely to
include a return to a managed float system as reported by a
Bangkok newspaper.
"I don't think they will do that. I think they are more likely
to try and limit the positions people hold," a foreign bank
dealer in Bangkok said.
The Nation newspaper quoted a senior Bank of Thailand official
as saying the central bank would form a consortium of commercial
banks and big Thai companies which would quote dollar/baht rates.
The Singapore dollar slumped in the afternoon following sharp
falls in the local stock market where the key Straits Times
Industrial index shed nearly 100 points to close 7.12 percent
down at 1,270.70.
Dealers said bank stocks were sold on worries of large
exposures to Indonesia.
The Sing was at 1.7820/50 to the U.S. dollar against 1.7505/55
late on Wednesday.
The Philippine peso was little changed at 44.30 per dollar in
late trade against Wednesday's 45.35 close, but traders remained
uneasy.
The Taiwan dollar slipped to close below the T$34 level at
T$34.325 to the U.S. dollar on back of the regional weakness.
The Hong Kong dollar was at 7.7460/80 per U.S. dollar from
Wednesday's 7.7480 close.
Hong Kong's Financial Services Secretary Rafael Hui said on
Wednesday local interest rates would inevitably rise if the Hong
Kong dollar came under speculative attack.
The South Korean won dipped to 1,785/90 per dollar against
Wednesday's 1,745 close as the rupiah's steep fall spurred a
dollar buying spree among foreign banks.
Traders said the market was concerned about South Korea's
heavy investment exposure in Indonesia, but the won's decline was
being limited by news of an agreement between the IMF and Seoul
to keep the dollar at 1,300 won on average for 1998.
The Australian and New Zealand dollars pulled back from
Wednesday's lows but struggled to extend gains amid lingering
unease over Asia.
The following table shows the drop in value of Asian
currencies since the crisis began in July. Currency movements are
in percentage terms and reflect the local unit's fall against the
dollar, not the dollar's rise.
Currency Current Value Fall since July 1
Rupiah 10,000.00 -75.68%
Thai Baht 53.30 -51.41%
Korean Won 1,785.00 -50.25%
Malaysian Ringgit 4.7700 -46.61%
Philippine Peso 44.30 -40.18%
Taiwan dlr 34.33 -19.16%
Singapore dlr 1.7800 -19.75%
Hong Kong dlr 7.7500 -0.01%