Nervous Asian currencies pull out of depths

Nervous Asian currencies pull out of depths

SINGAPORE (Reuters): Southeast Asia's ravaged currencies
limped tentatively out of the depths in late yesterday trade as
fears of concerted central bank action halted a mad scramble for
dollars.

Speculation Japan might ask the United States to help it prop
up the sagging yen pushed the U.S. dollar below 133 yen ahead of
a meeting between U.S. and Japanese monetary officials, injecting
a note of caution in other Asian currency markets.

"The market is actually quite worried there might be some
concerted intervention in the dollar/yen and that all the
regional central banks will come in as well," a U.S. bank dealer
in Singapore said.

Earlier, most currencies in Southeast Asia headed relentlessly
lower due to heavy dollar demand from companies and investors
amid poor liquidity and wide spreads.

"It's moving in big figures these days. I come in the morning
and don't recognize the levels. I go for lunch and the same thing
happens," said one senior regional currencies dealer in
Singapore.

The bloodletting on the currency markets spilled over, yet
again, into Asian bourses and several stock indices fell through
key support levels. Oil markets and many commodities were also
savaged by the rapid fall of regional currencies.

But the Malaysian ringgit recovered in late trade as players
liquidated long dollar positions after Finance Minister Anwar
Ibrahim confirmed the central bank had intervened in the currency
markets to defend the ringgit.

It was at 4.5600/700 at 1100 GMT after falling to a low of
4.8800 in morning trade.

Dealers said Bank Negara Malaysia had sold dollars for ringgit
at various levels.

The central bank said in a statement that Malaysia's total
debt amounted to $45.2 billion or 42 percent of its Gross
Domestic Product.

It said short-term debt at the end of June accounted for 30
percent of total external debt outstanding, in contrast with a
ratio published by the Bank of International Settlements of 56
percent, which had earlier spooked the market.

The Singapore dollar was also sharply higher at 1.7500/50 to
the U.S. dollar after falling to a more than seven-year low of
1.7940 earlier.

Dealers said the Monetary Authority of Singapore (MAS), the de
facto central bank, had intervened to stem the domestic
currency's sharp drop.

The MAS said in a written response to questions from Reuters
that it stood ready to "act decisively against any speculative
attack on the Singapore dollar".

"The MAS intervenes in the foreign exchange market from time
to time to ensure orderly movements of the Sing dollar exchange
rate ... We do not publicize our exchange rate operations," MAS
managing director Koh Yong Guan said in the statement.

Late rumors that the MAS had asked forex traders in certain
banks work to late on Wednesday also spurred some short-covering
in the Singapore dollar, dealers said. The MAS declined comment.

The Indonesian rupiah perked up a bit to 7,900/8,000 to the
dollar from an early low of 8,450, but dealers said it remained
shaky amid disappointment over Indonesia's 1998/99 budget,
unveiled on Tuesday.

The Thai baht recovered from below the 53.00 level to the
dollar in domestic and offshore markets in late trade after
Finance Minister Tarrin Nimmanahaeminda said the government would
announce new measures to curb currency speculation on Friday.

The baht was at 52.85/53.15 to the dollar onshore against
53.10/30 six hours earlier and 52.05/35 late on Tuesday. The
offshore rate was at 52.50/53.00 against 54.10/30 earlier.

The Philippine peso ended weak at 45.35 to the dollar but off
its opening low of 46.50. The central bank raised the overnight
borrowing rate to 12 percent from 11 percent in a bid to curb
speculation.

Manila traders said the rate hike had little impact, but the
peso received some support from a plan under which commercial
banks would offer non-deliverable forwards from 0500 GMT.

This will help companies hedge dollar-denominated debts
against further falls in the peso without having to buy dollars
now.

North Asian currencies continued to look jaundiced with the
Taiwan dollar faring the worst.

It fell through a 10-year support of T$34 to the U.S. dollar
within minutes of opening and ended at T$34.400 against Tuesday's
T$33.755 close in the face of mayhem elsewhere in Asia.

Dealers said the previously stolid currency was likely to head
for the T$35 level unless other Asian currencies saw a sustained
rebound.

Taiwan announced a rare trade deficit of US$80.1 million for
December, reflecting civilian aircraft imports, against a surplus
of US$1.078 billion in December 1996, the Finance Ministry said.

The Hong Kong dollar clung to the 7.75 support level against
the U.S. dollar and forwards jumped amid jitters in other
currency markets.

Traders said the Hong Kong Monetary Authority was seen
offering short-dated funds to ease rates in an effort to boost
the sagging stock market.

The South Korean won was relatively unscathed but fell off its
highs of 1,680 to the dollar as expectations of importer dollar
demand near the 1,600 level eclipsed foreign fund inflows to the
stock market.

It ended at 1,745 to the dollar against Tuesday's 1,742 close.

The Australian dollar ploughed 11-year-lows, weakening to
US$0.6316, before rebounding to 0.6372/77 from 0.6345/50 late on
Tuesday.

The New Zealand dollar also recovered to US$0.5680/87 against
0.5622/29 six hours earlier.