Dollar extends assault on SE Asian currencies
Dollar extends assault on SE Asian currencies
SINGAPORE (Reuter): The dollar continued its assault on most Southeast Asian currencies yesterday as concerns over Thailand refused to fade, but was showing a more mellow face late in the Asian day, dealers said.
"You can see some of the regionals pulling back up after Europe came in," said a dealer in Singapore.
The Indonesian rupiah and the Singapore dollar pulled back some losses, but the Thai baht and the Malaysian ringgit fell further.
Spot rupiah closed at 2,980/2,985 against the U.S. dollar yesterday, compared with an opening of 2,970/2,978 and Tuesday's close of 2,950.
After hitting a low of 1.5200 to the dollar, the Singapore dollar firmed towards 1.5150/70.
The baht fell to a low of 37.22 to the dollar compared to 36.55/65 late Tuesday, dampened by lower ratings on seven of its financial institutions by a credit agency.
The ringgit followed the baht down, falling to round 3.0150/00 compared to 2.9900/50 late on Tuesday.
The biggest factor in the market remained Thailand, where the political outlook was unclear and players continued to worry about a news report, denied by Bangkok, that the International Monetary Fund (IMF) might withhold rescue funds.
Thailand has two crucial parliamentary votes coming up next week -- one a no-confidence motion against the government and the other on a controversial new draft constitution.
Dealers in Singapore said Standard & Poor's downgrading of seven Thai financial institutions hammered the onshore and offshore baht below 37.00 to a dollar.
The baht's problems, especially worries about the IMF- organized US$17.2 billion rescue package for Thailand's battered economy, also hurt the ringgit, which broke the psychological 3.00 to a dollar level.
"The ringgit is still being hit by worries about Thailand, with dollar buying mostly by offshore players," said a dealer in Kuala Lumpur. "I think it's heading back to 3.05."
Singapore dealers said foreign funds were buying the dollar to convert ringgit from their sales of Malaysian stocks during the Kuala Lumpur bourse's recent tumble.
They said the rupiah got a slight boost from positive comments by the IMF on Indonesia's spending cuts packages to slash the current account deficit.
"But overall volume remains thin. The market has no drive and initiative," a currency dealer said. The rupiah's fate was still dependent on the region, he added.
Dealers said sustained domestic demand for dollars limited the downside risks for the U.S. currency, The 3,000 barrier could be tested again, they said.
Offshore operators had guarded the rupiah at the 2,980 level for some time but strong local demand seemed to outweighed their endurance, they added.
On Tuesday, the government announced spending cuts in state and state-linked projects to cap the current account deficit at three percent of gross domestic product (GDP) for the next two years.
But the move failed to correct bearish market sentiment in either the stock and foreign exchange markets. Dealers said the Singapore dollar was also singed by the dollar's heat, but more lightly.
"The pace is much slower, but it too has fallen against the dollar," said a Singapore-based dealer.