Currencies rebound as pressure shifts to N. Asia
Currencies rebound as pressure shifts to N. Asia
SINGAPORE (AFP): Southeast Asian currencies led by the Thai
baht and Indonesian rupiah closed strongly yesterday as market
focus shifted to North Asia, where the South Korean won and
Taiwan dollar succumbed to relentless pressure.
"North Asia is looking terrible," said Tan Kee Wee, a currency
analyst with the United Overseas Bank, one of Singapore's biggest
banks, as the won closed lower at 979.90 to the U.S. dollar after
breaching the psychological 980 level.
Southeast Asian sentiment was boosted after former Thai
premier Chuan Leekpai, 59, declared he had mustered a majority in
parliament, allowing him to succeed ex-general Chavalit
Yongchaiyudh, who stepped down Thursday.
"More than 210 (out of 393 MPs) support us, which means that
we have a majority," Chuan, who enjoys a good reputation among
investors, told a televised news conference in Bangkok.
The baht closed offshore at around 38 to the dollar, up
sharply from 39. 375 Thursday. Thai share prices surged 3.1
percent but most other stock markets in the Asia-Pacific region
fell.
The Seoul stock market registered the sharpest decline at 6.9
percent, Hong Kong was down 4.2 percent, Kuala Lumpur fell 3.2
percent, and Hong Kong was 3.0 percent lower.
Chuan and another former Thai premier, 75-year-old Chatichai
Choonhavan, had vied to replace Chavalit, who was forced to quit
after failing to solve the country's worst economic crisis in
decades.
"The baht strengthened on expectations that Chuan will come to
power," said Maya Pinto, a regional economist with British
financial research house I. D.E.A. in Singapore.
The Indonesian rupiah was also solid, closing at around 3,280,
up from its close of 3,282.50 the day before, when it was boosted
by intervention from the central banks of Indonesia, Japan and
Singapore.
There were no signs of fresh intervention Friday, dealers
said.
"The IMF has praised Indonesia as well so the rupiah is
looking well supported," said Pinto.
As part of a massive rescue by the International Monetary Fund
(IMF), Indonesia has carried out major financial reforms,
including the closure of troubled banks, easing of some state
monopolies and fiscal belt-tightening.
The Malaysian ringgit closed Asian trading at around 3.3000,
firmer than its close of 3,3050 the day before, while the
Singapore dollar closed at 1. 5675, up from Thursday's close of
1.5700.
The Philippine currency fell marginally to 34.85 pesos against
the dollar Friday from 34.83 pesos the previous day.
"As the haze goes away, the regional currencies are breathing
more easily, " said a foreign exchange dealer with a European
bank in Singapore, referring to the easing regional air pollution
from forest fires in Indonesia.
But the financial skies were grim in North Asia.
The South Korean won fell despite the fact that the central
bank was selling dollars on the spot market to keep the won
within 980. Bearish sentiment on the economy and yen weakness
exacerbated the effects of strong demand for dollars.
Dealers said no one other than the central bank, which has
sold about 500 million U.S. dollars daily in recent sessions, was
trying to sell dollars.
The Taiwan dollar slid in line with the won and closed at
30.952 to the dollar, from 30.70 the day before, dealers said in
Taipei.
"We are looking for it to touch the 31 level in the near term,
basically because of contagion from the won," said Pinto.
Southeast Asian sentiment failed to be dented by political
uncertainties in Bangkok overnight after two rival coalitions led
by the two ex-premiers both announced they could form governments
after Chavalit stepped down.