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.