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.