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%