Mahathir declares verbal war on speculators

Mahathir declares verbal war on speculators

By Madhav Reddy

KUALA LUMPUR (Reuter): If words could kill, Malaysian Prime Minister Mahathir Mohamad would have wiped out the speculators causing havoc in Southeast Asian currencies.

In the last four days, the tough-talking Mahathir has called currency speculators "rogues", "robbers", "anarchists" and "brigands" with a "political agenda" to "destroy all the progress that we have made".

"We see a well-planned effort to undermine the economies of all the ASEAN countries by destabilizing their currencies.

"Our economic fundamentals are good, yet anyone with a few billion dollars can destroy all the progress that we have made," Mahathir said at the opening of the ASEAN foreign ministers meeting on Thursday.

Mahathir, known for his sharp-tongued criticisms of the West, said the countries of the region were told they must open up their markets and that trade and commerce must be free.

"Free for whom? For rogue speculators. For anarchists wanting to destroy weak countries in their crusade for open societies, to force us to submit to the dictatorship of international manipulators," he said.

"We want to embrace borderlessness, but we still need to protect ourselves from self-serving rogues and international brigandage.

"We feel that there is some other agenda, apart from making money. As you may have noticed, ASEAN countries are the targets...Thailand, Indonesia, the Philippines (Singapore) and Malaysia," he was quoted as saying by local newspapers on Monday.

ASEAN, or the Association of South East Asian Nations, also groups Brunei and Vietnam, and since Wednesday, Laos and Myanmar. Mahathir was quoted as telling Malaysian reporters following him on a six-day visit to Japan on Monday that a "certain powerful American financier" was behind the speculative attacks. He said that the American financier, whom he has not named, was on a "crusade for charity".

"It means he robbed from the poor to show he's charitable," added the prime minister, who returned to Malaysia on Tuesday. Dealers in Singapore and London have named George Soros and his Quantum group as one of those leading the attack on Southeast Asian currencies. Soros also sponsors The Open Society, an international humanitarian foundation.

Apparently not satisfied with calling them names, Mahathir on Thursday threatened speculators with possible laws in all of Southeast Asia to curb speculation.

His verbal attacks have not cut much ice with speculators, who continue to sell down the five major currencies in Southeast Asia, but they have set the tone for possible future retaliation by governments in the region, analysts said.

"The PM has not said anything that shows there would be concrete steps taken against speculators," said a dealer with a European bank in Singapore. "But this could mean greater cooperation between ASEAN countries in future."

Dealers and analysts said a law against speculation may not bear fruit unless the countries resorted to draconian capital controls. But it could take the form of a stronger agreement by central banks to help each other.

In the past few years, central banks of the region and the Bank of Japan have struck repurchase pacts under which they help each other defend their currencies if asked.

Malaysia and neighboring countries have seen attacks on their currencies in the past month, forcing devaluations in Thailand and the Philippines and expensive intervention efforts in Malaysia. Indonesia has widened the trading band for rupiah.

On Thursday, all the currencies fell to new lows, breaking psychological barriers, on sustained dollar buying.

The Singapore dollar fell to a 32-month low of 1.4785 per U.S. dollar, the ringgit broke through the 2.65 barrier, the baht slipped sharply to a low of 32.60, the rupiah was below 2,600 and the Philippine peso eased to 28.47 from 28 previously.