Fear shrouds sliding SE Asian currencies
Fear shrouds sliding SE Asian currencies
SINGAPORE (Reuters): Southeast Asian currencies fell again
yesterday in a market disappointed by Thai financial reform plans
and fearing Malaysia's looming budget would not live up to
expectations.
Thailand's keenly awaited reform package, which proposes the
creation of two agencies to restructure and manage 58 suspended
Thai finance firms and requires financial institutions to raise
their capital, left currency traders hungering for more.
"I think it was all very much as expected. I think the package
was broadly neutral, but remember, the market was expecting good
news. I think it failed to impress," said a dealer at a British
bank.
The baht was at 36.52/62 to the dollar onshore at 0955 GMT
against 36.45/55 late on Tuesday. The offshore rate slid further
to 36.60/90 against 36.30/50.
Dealers said the offshore rate showed no signs of subsiding
after speculation the package would include an end to Thailand's
two-tier baht market boosted the dollar on Tuesday.
"The market is unhappy with the plans: there's nothing new and
it's inadequate," a U.S. bank dealer in Singapore said.
The dollar should head for 37.50 and even 38.50 baht after
breaching the key 36.45 resistance, he said.
Other Southeast Asian currencies also suffered as players
piled back into the dollar in afternoon trade.
"I think it was largely technical. Once the (dollar) selling
interest had been exhausted, the market found itself short of
dollars and the move was very quick," the U.S. bank dealer said.
The Indonesian rupiah fell through the 3,500 to the dollar
level as strong domestic demand for dollars overwhelmed hedge
fund and interbank sales, dealers said.
The rupiah hit a low of 3,595 but sporadic intervention by the
central bank helped it recover a bit to 3,565/75.
Dealers said the central bank stepped in with small amounts
but failed to reverse the market trend, although it helped stop
further declines.
They said cheap rupiah financing, reflected by negative short-
dated swap rates, also helped dollar purchases.
In Malaysia, the ringgit fell to 3.1575/675 to the dollar from
3.1070/170 about six hours earlier.
Dealers said aggressive dollar bids by interbank players had
absorbed offers around the 3.12 level, believed to be on behalf
of the central bank.
Kuala Lumpur stocks were also hit by jitters ahead of Friday's
budget. The composite index ended down 2.56 percent at 801.52.
The Singapore dollar fell to 1.5475/5525 to the U.S. dollar
from 1.5403/18 around midday, partly due to corporate dollar
purchases, dealers said.
The Philippine peso was slightly firmer at 33.75/82 to the
dollar after a turbulent day, which saw it breach its first
volatility band at 34.598 pesos within the first half hour,
wiping out all its gains from earlier in the week.
Manila traders said the central bank sold dollars to counter
demand from companies, but the outlook for the peso remained
choppy as the central bank left the market guessing about its
intentions.
Central bank director Diwa Guinigundo said on Wednesday the
peso's volatility bands could be removed soon. The peso has
smashed through the bands repeatedly since they were imposed by
Philippine banks with the tacit support of the central bank, to
calm the market.
The South Korean won ended weaker at 914.30 to the dollar
against Tuesday's 914.00 as the market continued to be plagued by
worries about corporate defaults.