Pressure on Southeast Asian currencies eases

Pressure on Southeast Asian currencies eases

SINGAPORE (AFP): Pressure on Southeast Asian currencies eased yesterday, a day after they sank to their lowest points this year, as speculators feared concerted central bank intervention, dealers said.

But some analysts felt that U.S. hedge funds, whose attacks led to the effective devaluation of the Thai baht and Philippine peso, would now turn their attention to the North Asian currencies.

Dealers said the Malaysian ringgit slumped to an 18-month record low against the US dollar to 2.5700 in New York trading and flirted with the same level again in early Asian trading compared to Monday's close of 2.5340 here.

Another warning to speculators by Malaysian Deputy Premier Anwar Ibrahim Tuesday sparked fears of intervention by central Bank Negara and eased pressure on the ringgit which ended at 2.5555, dealers said.

"BNM (Bank Negara Malaysia) was seen capping that level (2.5700)," a dealer with a British finance house said, indicating the central bank intervened to check the slide of the ringgit.

The Philippine peso, which was effectively devalued last week after the Thai baht float and ensuing plunge on July 2, fell 3.1 percent against the U.S. dollar Tuesday in volatile trading, the Bankers Association of the Philippines (BAP) said in Manila.

The peso's weighted average at the close of foreign exchange trading at 4 p.m. (0800 GMT) was 29.674 pesos to the dollar compared to Monday's average of 28.77 pesos, the BAP said.

"The peso-dollar exchange rate continued to weaken as many banks, which sold their dollars the previous week, are short of dollars," a trader at a local commercial bank in Manila said.

The Thai baht dipped to 29.975 to the greenback compared to its Monday close of 29.85 while the Indonesian rupiah recovered to 2,448.50 from 2,450 after sinking to an all-time low on Monday.

Both the baht and the rupiah had hit all-time lows in Monday's trading as speculators took advantage of minimal central bank presence, with Bank Negara Malaysia's absence seen as a sign it had left the ringgit to market forces.

But analysts cautioned that monetary authorities had not given up the fight.

"It is very dangerous to second-guess the motivations of regional central banks. They have earned the respect of speculators," said Desmond Supple, head of regional currency research at Barclays (BZW) Global Foreign Exchange here.

Andy Tan, general manager at MMS International in Singapore, said part of the reason for relatively quiet trading late Tuesday was due to fears of a concerted action by central banks.

Tan also raised the possibility of hedge funds attacking several North Asian currencies, including the new Taiwan dollar and the Korean won.

"Almost all the Southeast Asian currencies have come under attack, except may be the Singapore dollar. That leaves the possibility of funds moving to North Asia whose currencies suffer from some form of inherent weakness or another," Tan said.

The Singapore dollar was slightly firmer at 1.4425 to the US dollar compared to Monday's close of 1.4440.

Regional markets have been shaky since Thailand floated the baht and the Philippines cut the peso adrift after both the economies spent billions of dollars to defend the currency against speculative attacks.