Malaysian, S'pore and RI currencies hit new lows

Malaysian, S'pore and RI currencies hit new lows

SINGAPORE (AFP): Malaysian and Singaporean monetary
authorities intervened in the markets yesterday as their
currencies slumped along with the newly-floated Indonesian rupiah
to new lows against the mighty U.S. dollar, dealers said.

Speculative funds ignored the central banks' presence,
clobbering the ringgit to a 24-year-low of 2.8250 and pushing
down the usually robust Singapore unit to a 38-month low of
1.5245 against the greenback.

The rupiah plunged to another record low of 2,900 to the U.S.
dollar from its Thursday close of 2,755.

"The market is grasping for something to hold on to but it
seems to be getting news with negative connotations, which
provides very little support for the regional currencies," said
Andrew Fung, treasury economist with Standard Chartered bank
here.

"Obviously, we are a long way from having achieved an
equilibrium in the currency markets," Fung said, referring to the
regional currency turmoil sparked off by the effective
devaluation of the Thai baht on July 2.

The ringgit, which had earlier seemed to be holding on quite
well after being beaten down on Monday for the first time in
three years to the 2.7000 level, was the worst hit as it breached
the 2.8000 level yesterday.

"The speculative funds drove down the ringgit, which kissed
the 2.8250 level during lunch time when most Malaysian
institutions were closed for Friday Moslem prayers," a dealer
said.

The ringgit recovered to 2.7870 by mid-afternoon on profit-
taking on the dollar.

The Malaysian currency posted a historic low at 3.0670 to the
greenback in 1971.

Dealers said the funds had disregarded Malaysia's central bank
intervention at the 2.7910 level.

"The offshore players may have found the right opportunity to
push the ringgit down because the market was thin due to prayer
time in Malaysia," said Jacqueline Ong, regional analyst with
British finance house I.D.E.A.

The Singapore dollar was at first tugged down to a low of
1.5220 to the U.S. dollar in New York trading Thursday and when
it reached the same level in Asian trading yesterday, the
Monetary Authority of Singapore (MAS) reportedly intervened.

The Singapore unit recovered to 1.5195 on the intervention but
continued attacks pushed it down to 1.5245. It had closed
Thursday at 1.5098.

The intervention by the Monetary Authority of Singapore (MAS)
was the first such action taken by the de-facto central bank
since currency turmoil broke out six weeks ago.

"The market is so bullish for the U.S. dollar, basically the
weak sentiment for the regional currencies coupled with the U.S.
dollar's rebound on major currencies was reflected today," said
Alison Seng, an analyst with MMS International, a unit of
Standard and Poor's.

Dealers said the rupiah remained under pressure despite
Thursday's sharp 5. 5 percent fall immediately following the
central Bank Indonesia's decision to abandon a fixed trading band
and freely float the currency.

"Short-term interest rates in Indonesia are reported to have
surged 125 percent and the situation was worsened by current
panic in the financial market that there are not enough funds,"
said Jacqueline Ong, regional economist with British finance
house I.D.E.A.

Ong said rupiah weakness was expected to persist because many
corporations in Indonesia were "still holding unhedged
exposures."

"They had not hedged their foreign exchange exposure because
it has not been the Indonesian culture to hedge. So we may see a
scramble for dollars from the corporates itself," she said.

Hedging is a way of largely offsetting the exposure created by
holding a currency by taking on debt in the same currency.

The Thai baht was lower at 31.73 to the dollar from 31.30
Thursday while Philippine peso fell 1.2 percent to 29.85 against
the greenback within several minutes of the start of foreign
exchange trading in Manila.

It had closed at 29.49 on Thursday.