Malaysian ringgit rise lifts Southeast Asian currencies
Malaysian ringgit rise lifts Southeast Asian currencies
SINGAPORE (Reuter): Southeast Asian currencies regained some poise yesterday, led by a recovery in the Malaysian ringgit as players took profits on the dollar's sharp rise.
But dealers said the worst was not over yet.
The market largely brushed aside growing calls for increased cooperation between governments from senior finance officials at the annual World Bank/IMF meeting in Hong Kong, as nobody was offering specific plans, dealers said.
U.S. Treasury Secretary Robert Rubin said a meeting to discuss economic strategies for the region was being planned with Southeast Asian countries, Japan and the IMF.
Southeast Asian countries, hard hit by months of currency turmoil, have proposed creating an emergency support fund to complement the IMF's work in tackling regional economic crises.
The idea drew mixed responses. Germany dismissed it as a mere safety net that would not help cultivate sound economic policy. The United States showed willingness to talk about it.
Malaysian Finance Minister Anwar Ibrahim tried to alleviate investor jitters about his country's policies, insisting there had been no change to foreign exchange trading rules following statements on Sunday by Prime Minister Mahathir Mohamad.
The ringgit slumped about 3 percent against the dollar on Monday after Mahathir said currency speculators were immoral and that forex trading should be limited to trade needs.
Anwar also said the recent market volatility had not damaged Malaysia's real economy and that he expected an improved budget surplus this year and next following spending cuts.
The ringgit was at 3.0620/70 to the dollar at 0910 GMT against an overnight historic low of 3.1300.
Further south, the Singapore dollar strengthened through the 1.52 per U.S. dollar level on spillover dollar sales.
Dealers said talk of U.S. dollar sales by Brunei, attributed mainly to the oil-rich kingdom's repatriation needs, gave added impetus to the Singapore dollar's rebound.
The Brunei and Singapore dollars are pegged under a currency interchangeability agreement between the two governments.
Politics continued to haunt the Thai baht on the eve of a no- confidence debate, but the IMF's upbeat assessment of Thailand's efforts to implement its reforms gave some support.
IMF First Deputy Managing Director Stanley Fischer said the Fund's reform programs were being implemented rapidly and the baht had probably overshot a reasonable level.
The baht was at 36.80/90 to the dollar onshore against 37.20/30 late on Monday. It was sharply higher offshore at 35.10/20 against 36.30/50.
"Most of the bad news is already out on Thailand. A lot of people are already long dollars and they might start to square off into the fourth quarter," a senior dealer in Singapore said.
The Indonesian rupiah broke through the psychological 3,000 level, firming to 2,980/90 against an opening of 3,020/30.
The Indonesian central bank kept benchmark interest rates unchanged on Tuesday after lowering them by one and two percentage points on Monday, the fourth cut this month.
The Philippine peso and Korean won remained depressed with the peso bearing the brunt of speculative sales from Manila banks troubled by steep falls in regional currencies on Monday.
The peso ended at 33.63 to the dollar against a previous 33.34 as the central bank stayed out of the market.
The Bank of Korea intervened to rescue the sagging won minutes before the market closed, bringing it up from a low of 914.70 to the dollar to end at 914.00, still below its previous 912.30 close.