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.
-------------------------------------------------------
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%