Recouping stocks bolster Asian currencies
Recouping stocks bolster Asian currencies
SINGAPORE (Reuters): Regional stock markets showed solid gains across the board on Tuesday and as overseas investors tentatively dipped a toe into the equities pool, local currencies firmed.
A solid 66-point gain in the Dow Jones on Monday together with a better performance in Hong Kong after its shakeout saw flows across the foreign exchanges and light but persistent demand for recently beleaguered regional currencies.
Indonesia remained firmly in the spotlight as international efforts to put the country back on track to IMF-backed economic reforms gathered pace.
U.S. Deputy Treasury Secretary Lawrence Summers said after a meeting with President Soeharto that the Indonesian leader recognized the need for strong measures to restore investor confidence.
Indonesian Finance Minister Mar'ie Muhammad said talks with the IMF had been "very positive" and in terms of fundamental thinking there was no difference between the Fund and the government.
The Indonesian rupiah recovered to 7,900 per dollar from early lows around 9,500 but dealers said trading was very subdued as players awaited further details of the IMF talks.
Jakarta stocks closed over nine percent higher amid optimism about the talks, although the market will have to wait until Thursday before the full outcome of the talks is announced.
Elsewhere in Southeast Asia, the Thai baht crept back from its lows as exporters sold dollars amid talk of possible intervention by the central bank.
The baht was at 55.70 per dollar onshore against 56.35 late on Monday. The offshore rate was at 53.45 against 56.10.
"I think there was probably some intervention in the market, but the region is steady so that could be factor. Also there are some exporters selling," said a dealer at a large Thai bank.
The Malaysian ringgit was at 4.6050 to the dollar against 4.6500/800 late Monday.
Dealers said its fall was being cushioned by dollar sales by U.S. funds above the 4.70 level, while gains were blocked by interbank and corporate dollar buying at the 4.55 level.
The Singapore dollar firmed to 1.7735 to the U.S. dollar from 1.8010 late on Monday as the stock market recovered from Monday's drop of nearly nine percent.
The Philippine peso extended recent gains, rising to 43.55 per dollar against a previous 43.95 close as the central bank continued to support the currency through swap contracts with selected banks.
Philippine central bank Governor Gabriel Singson said the peso was still undervalued even after its four-day upturn.
"I think it's undervalued. We want a rate devoid of panic and speculation then that is a free market rate," he told reporters.
In north Asia, the Hong Kong dollar was steady to a touch firmer at 7.7465 to the U.S. dollar. Forwards and interest rates eased as the stock market recovered, absorbing the news of investment bank Peregrine's collapse.
The South Korean won slipped to 1,763 per dollar from a previous 1,738 close as traders kept a wary eye on developments elsewhere, but its downside was capped by exporter dollar sales.
The central Bank of Korea said usable foreign reserves were $8.87 billion at the end of 1997, compared with $29.42 billion a year ago and $7.26 billion at the end of November.
The following table shows the drop in value of Asian currencies since the crisis began in July. Currency movements are in percentage terms and reflect the local unit's fall against the dollar, not the dollar's rise.
Currency Current value Move since July 1.
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Indonesian rupiah 8,100.00 -70.00%
Thai baht 55.75 -53.54%
Korean won 1,763.00 -49.63%
Malaysian ringgit 4.61 -45.28%
Philippine peso 43.55 -39.15%
Taiwan dollar 34.37 -19.25%
Singapore dollar 1.78 -19.62%
Hong Kong dollar 7.75 -0.02%