Baht and peso plunge, but rupiah rebounds to 7,360

Baht and peso plunge, but rupiah rebounds to 7,360

HONG KONG (Dow Jones): Sales of the baht, sparked by investor
fears over the health of Thailand's banking system, sent the Thai
currency hurtling to a 10-month low on Wednesday.

The Philippine peso also fell to its weakest level in nine
months, but the Indonesian rupiah strengthened sharply as market
players cut speculative long dollar positions.

The New Taiwan dollar ended up slightly from the previous
day's close, although selling by the central bank prevented it
from regaining Tuesday's near 18-month intraday high.

The Korean won finished slightly higher.

Renewed fears over the health of the Thai banking system were
said by traders to be behind heavy U.S. dollar purchases against
the baht, pushing the greenback to a 10-month high in early
trading.

In the offshore market in Singapore, the U.S. dollar hit a
high of 38.50 baht, its strongest since Oct. 9, 1998, shortly
before the opening of the Bangkok market.

"The fundamental economic indicators do not show any new
weaknesses in the Thai economy," said Kevin Ng, regional
economist at ABN Amro Asia in Singapore.

Both Thailand's trade surplus, measured at US$4.66 billion
over the first seven months of the year, and its foreign
reserves, currently at $32 billion, are strongly baht supportive,
he said.

"The reason the baht is so weak at the moment is mostly
internal," Ng said. He said investors feared that levels of
nonperforming assets held by Thai banks were significantly higher
than the government disclosed.

The U.S. dollar retreated to 38.3600 baht late in Asian
trading, although that level was still higher than 38.1850 baht
late Tuesday.

Although the Bank of Thailand attempted to calm investor fears
by announcing that the proportion of bad loans in the banking
system fell to 47.47 percent in June from 47.70 percent at the
end of May, doubts over the accuracy of the figures persisted.

"You can't fight sentiment. The only thing to do is stay with
a long dollar position," said the baht trader at one U.S. bank in
Singapore.

The peso dropped to its lowest level since early December as
fears of domestic political instability compounded by low
interest rates fueled local currency sales by onshore investors.

Although some offshore players said the U.S. currency may
extend its gains beyond Wednesday's high of 39.780 pesos to hit
40.000 pesos, many analysts agreed with Philippine Central Bank
governor Rafael Buenaventura, who said the peso's weakness would
only be temporary.

Pointing to the Philippines' relatively healthy fundamentals,
some suggested that the peso was an attractive buy at current
levels.

The U.S. dollar eased from its earlier high to close at 39.610
pesos late Tuesday, down a touch from 39.620 pesos the previous
day.

The rupiah ended Asian trading hours sharply higher after
dealers, who went long on the dollar last week in the expectation
of further rupiah depreciation beyond Rp 8,250, liquidated their
positions.

Late in Asia, the U.S. dollar had fallen to Rp 7,360, down
from Rp 7,725 on Tuesday.

Indonesian Coordinating Minister for Economy, Finance and
Industry Ginandjar Kartasasmita said he expected to see the
dollar at Rp 6,000 to Rp 6,500 within the next couple of days.

In North Asia, heavy U.S. dollar buying by Taiwan's central
bank prevented the U.S. currency from falling beyond its intraday
low of NT$31.934.

The currency has been on an upward trend since last week, when
index-compiler Morgan Stanley Capital International raised the
weighting of Taiwan in its benchmark investment indexes.

The U.S. currency was at NT$31.950 at Wednesday's close, down
from NT$31.969 the day before.

And the dollar also slipped to 1,203 Korean won, from 1,205.80
won the previous day.