Ringgit and rupiah pushed to new lows

Ringgit and rupiah pushed to new lows

SINGAPORE (AFP): The Malaysian ringgit and the Indonesian rupiah slumped to new lows against the U.S. dollar in overnight European trading after they came under attack from hedge funds pouncing on Southeast Asian currency weakness, dealers said yesterday.

In early Asian trading yesterday, the U.S. dollar was fetching 2.5885 ringgit and 2,479 rupiah.

The attack in Europe was a follow-up to the one late Wednesday in Asia when funds pushed the regional currencies sharply lower, catching many central banks by surprise.

These fresh attacks ended a brief spell of uneasy calm on regional currency markets, which came under intense speculative pressure on Monday following the de facto devaluation of the Thai baht on July 2 and the Philippine peso last week.

"Some hedge funds tried to pressure the ringgit and rupiah, they sold quite a chunk of these currencies," said Alison Seng, analyst with U.S. finance house MMS International.

The ringgit plunged to a 34-month low of 2.5920 against the greenback from Wednesday's Asian close of 2.5700.

The rupiah fell to 2,480.00 after hitting a low of 2,485 against the U.S. dollar from Wednesday's close of 2,471.

Some hedge funds believed they could use thin liquidity expected yesterday due to a Moslem public holiday in Malaysia and Indonesia to pin down the currencies of the two countries, dealers said.

But foreign exchange sources said some state-linked Malaysian banks and brokers had been asked to return to work yesterday to help check ringgit volatility on behalf of the central bank.

Dealers said the Singapore dollar also seemed to be under pressure yesterday as funds turned their attention to the robust currency after the overnight attack against the ringgit and rupiah.

The Singapore unit was trading higher at 1.4531 against the greenback from Wednesday's close of 1.4455.

"The players seem to think that the ringgit and rupiah had come down substantially and there were prospects for the Singapore dollar to also come down," Seng of MMS International said.

The peso was trading yesterday at 29.257 from Wednesday's close of 29.30 while the Thai baht hovered at 29.90 from 29.85.