Asian currency trading quiet, waiting for Indonesia's move
Asian currency trading quiet, waiting for Indonesia's move
SINGAPORE (Reuters): Asian currency trading was subdued yesterday despite frenzied selling of stocks as wild rumors about central bank interventions and looming debt moratoria pared activity to a minimum.
Dealers said liquidity had dwindled in Southeast Asian currencies as spreads widened because of fears that embattled Indonesia was on the verge of declaring a debt moratorium or introducing trading curbs on the rupiah.
The Indonesian currency has lost nearly half its value against the U.S. dollar in the last six trading days.
"Everything is customer- or commercially-driven at the moment," a U.S. bank dealer in Singapore said.
"In the rupiah, the interbank market doesn't exist anymore. Yesterday, the spread was about 100 rupiah. Today, it's 500- 1,000, so it's practically impossible to trade," he said.
Rumors the U.S. Federal Reserve had checked rates on Asian currencies overnight also kept traders on their toes, with some even citing the Fed's presence behind the rupiah's rebound of more than 30 percent yesterday.
A Fed spokesman declined comment on the rate checking rumors and most analysts were skeptical of the U.S. central bank intervention to shore up Asia's sagging currencies.
"Nobody said they were hit in the market here ... And if the Fed did come in, it would want the world to know," said Ishak Ismail, market intelligence analyst at I.D.E.A. in Singapore.
He attributed the rupiah's recovery, which bolstered most other Asian currencies, to the unloading of long dollar positions by players anxious to avoid being caught out by possible developments at the weekend.
The rupiah was quoted at 7,800/8,300 to the dollar at the close of trading against its opening at 10,500/11,500.
Dollar sales by state banks in Jakarta and follow-through selling by Singapore operators helped the rupiah fend off the impact of rumors about street demonstrations in Jakarta and the health of President Soeharto. Both were denied by military and government officials.
News that U.S. Deputy Treasury Secretary Lawrence Summers would soon visit Indonesia and other Asian countries also helped calm Indonesian markets.
Summers, who has called on Jakarta to step up efforts to convince markets it is committed to IMF-sponsored economic reforms, would travel to the region to consult on the economic situation, said White House press secretary Mike McCurry.
He said in a statement Clinton had spoken to Soeharto and Singapore Prime Minister Goh Chok Tong by telephone and underscored the importance of the region to the United States.
Elsewhere, the Malaysian ringgit firmed to 4.5750/850 to the dollar from lows of around 4.7800, following intervention by the central bank and calming words by the country's leaders.
The Singapore dollar also showed a slightly healthier tone amid higher domestic interbank rates and talk of overnight intervention by the de facto central bank.
The MAS does not comment on its market operations.
The Thai baht weakened in domestic markets but held up overseas as traders awaited the announcement of new measures to curb speculation in the currency, expected later yesterday.
It was at 53.90/54.10 to the dollar onshore against 53.70/54.00 in early trade. The offshore rate was at 52.50/53.50 against 54.10/60 earlier.
The Philippine peso ended firmer at 44.30 to the dollar against a previous 44.92 close due to the central bank's indirect intervention and the rupiah's recovery.
Police said they would shut down 130 money changers in Manila's main tourist district, accusing them of hoarding dollars and contributing to the peso's decline.
North Asian currencies were relatively shielded from the mayhem elsewhere, mainly due to the yen's relative strength against the dollar.
The Taiwan dollar ended firmer at T$34.100 to the U.S. dollar against Thursday's T$34.325 close.
The Hong Kong dollar ended at HK$7.7430 against Thursday's HK$7.7455 close. Forwards also backed off following the rupiah's rebound.
The South Korean won ended down at 1,810 to the dollar against Thursday's 1,788 close as the positive impact of news that global bankers had reaffirmed short-term financing for the country was countered by jitters about Indonesia.
The Australian dollar was much higher at US$0.6445/50 from morning levels of around 0.6320/25, as a big buy order sparked rumors the Reserve Bank had intervened. A central bank spokesman said the bank's policy was never to comment on market rumors or its operations.
The rumors also boosted the New Zealand dollar to US$0.5745/52 from an opening 0.5673/80.
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 Move since July 1.
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Indonesian Rupiah 7,675.00 -68.31%
Thai Baht 53.90 -51.95%
Korean Won 1,806.00 -50.83%
Malaysian Ringgit 4.58 -44.92%
Philippine Peso 44.24 -40.10%
Taiwan dollar 34.11 -18.63%
Singapore dollar 1.77 -19.28%
Hong Kong dollar 7.75 -0.00%