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.