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.