Asian currencies upbeat as Indonesia dithers
Asian currencies upbeat as Indonesia dithers
SINGAPORE (Reuters): Asian currencies were slightly more
upbeat yesterday as the U.S. dollar lost steam against the
majors, but dealers said trade was relatively slow and lacked a
clear trend.
The Indonesian rupiah languished in a narrow band as interest
dwindled in the face of continuing uncertainty over Jakarta's
plans to implement a currency board system.
Comments by the new central bank governor, Sjahril Sabirin,
provided few new clues and were largely shrugged aside.
"The market just can't be bothered at the moment. The rupiah
has found some equilibrium between 9,000 and 10,000 (to the
dollar) for the time being," a U.S. bank dealer said.
Sjahril told a news conference he wanted to stabilize the
rupiah "at a rate affordable to the public" and a currency board
system was "an attractive way to stabilize trade".
He said the central bank was still assessing whether
conditions for a currency board were in place in Indonesia.
Minister of Finance Mar'ie Muhammad said on Monday the final
decision on the currency board rested with President Soeharto.
The United States, European governments and the IMF
(International Monetary Fund) have criticized the plan and said
Indonesia needed to address the more urgent issue of its massive
corporate debt obligations first.
President Bill Clinton said he planned to send former Vice
President Walter Mondale to Indonesia for talks on the crisis.
Elsewhere, the Thai baht held onto early gains after the
government announced a host of new economic targets and raised
taxes on various products, including gasoline.
Dealers said the new targets reflected greater realism on the
government's part and boded well for the baht in the longer-term,
though its immediate rise would be hampered by corporate dollar
demand around the 43.50/80 levels.
The Malaysian ringgit rose after comments by government
economic adviser Daim Zainuddin that Malaysia was willing to give
up a policy of granting preferences in areas like equity
ownership and property prices to ethnic Malays.
Dealers said such a move would allow non-Malays and foreigners
to pump badly needed capital into local companies, but they added
that the ringgit would run up against dollar demand around the
3.70 level.
The Singapore dollar was lifted by its neighbor's rise and the
dollar's softening against the yen, but dealers said gains would
be blocked by buying of the ringgit/Sing dollar cross and caution
ahead of Friday's national budget.
"I'm more bullish on the ringgit/Sing cross. It should go
higher to 45.00 or even 50.00. I think the Singapore dollar is a
bit overvalued and eventually the cross should correct," a U.S.
bank dealer said.
The Philippine peso shrugged off a ratings downgrade by
Standard and Poor's Corp (S&P) as a lack of corporate dollar
demand and a calmer tone in regional currency markets limited the
damage.
The South Korean won finished stronger as some banks squared
their dollar positions after failing to push the dollar above
1,670 won.
The Taiwan dollar was supported by the U.S. dollar's softer
tone and the stock market's strength.
The Hong Kong dollar and forwards were little changed in slow
trade due to calm in regional markets.