Glimmers of hope drive SE Asian currencies up

Glimmers of hope drive SE Asian currencies up

SINGAPORE (Reuter): Southeast Asian currencies rebounded
yesterday as traders saw rare glimmers of hope in Indonesia's bid
for IMF assistance and Malaysia's looming budget.

Malaysia's ringgit, which has been creeping higher this week
on expectations of a market-friendly budget, was the day's
biggest gainer. It rose nearly four percent at one point to hit a
high of about 3.0514 to the dollar against levels of about
3.1774/804 late on Wednesday.

"With (Malaysian Finance Minister) Anwar Ibrahim saying the
budget will stop the rot, there's very little incentive to bet
against it," said Jacqueline Ong, regional economist at I.D.E.A.

She said Kuala Lumpur players were expecting tax cuts in the
new budget -- a prospect she saw as unlikely -- and offshore
funds didn't want to be caught on the opposite side.

"I've got a feeling we've about hit the dollar bottom. It
should be capped between 3.00 and 3.05 ringgit. But you never
know: Given the thin volume, we could be looking at 2.9
tomorrow," she added.

Dealers brushed off Prime Minister Mahathir's Mohamad's
statement that Malaysia was formulating a way to counter the
ringgit's fall which would require the cooperation of all
Malaysians.

"Mahathir's comments have pushed the ringgit down so far, so
why should people buy it because of this," said one.

But some said the Mahathir's growing calls for further
regulation of currency trading, which appeared to be attracting
the IMF and World Bank, were making players more cautious.

Indonesia's decision on Wednesday to avoid a possible Thai-
style crisis by seeking help from the International Monetary Fund
(IMF) and other institutions to bolster its foreign reserves also
lifted spirits.

The rupiah opened upbeat as traders took their cue from London
and New York where the IMF news was greeted with cheers.

Persistent domestic dollar demand kept it stuck around the
3,550 per dollar level for most of the day, a near three percent
rise from 3,650/60 late on Wednesday.

Finance Minister Mar'ie Muhammad said Indonesia was sounding
out multilateral institutions, including the IMF, for help in
boosting its foreign exchange reserves, but he did not specify
how much assistance was being sought.

Analysts said this would give the Indonesian central bank
access to desperately needed dollars to help domestic companies
meet burgeoning foreign debt obligations following the rupiah's
33 percent drop against the dollar since early July.

"The rupiah's upside will be limited in the short term. There
are no immediate measures on the IMF news. The question now is
how many foreign creditors are going to roll over their maturing
debts," said Ong at I.D.E.A.

Despite heavy sales of dollars for rupiah by offshore parties
since Wednesday, dealers said the rupiah faced a stiff barrier at
3,500 to the dollar.

The Singapore dollar was propped up by the ringgit's rise,
strengthening through the 1.5400 level to the U.S. dollar in
afternoon trade against 1.5580/90 late on Wednesday.

"The market has been very long dollars against the Sing and
some stop-loss orders were triggered at 1.5480 in dollar/Sing," a
European bank dealer said.

"The 1.5550 level should be a top for now. I think this
correction could go all the way to 1.50 and 2.98 (on
dollar/ringgit)," she added.

The Thai baht dipped briefly on comments by Finance Minister
Thanong Bidaya, but dealers said activity was fairly subdued as
the market continued to look optimistically ahead to next week's
finance sector reform package.

Thanong, in Japan to boost investor confidence in Thailand,
told reporters the two-tier baht system could be lifted once
market confidence returned. He also said economic growth would be
"lower than two percent, but still positive," in 1997.

The baht was at 36.45/60 to the dollar onshore against
36.50/60 late on Wednesday. It was at 35.70/90 offshore.

The Philippine peso ended higher on central bank dollar sales
at the 35.50 peso level, which caused the peso to breach the
volatility band three times in its march upwards.

Trading was suspended after the third breach, an hour before
the market's close. The peso ended sharply up at 34.129 against
its previous 35.40.

Central bank governor Gabriel Singson said the bank had sold
about $20 to $24 million by noon.