Ringgit, rupiah hit new lows as demand for dollar higher
Ringgit, rupiah hit new lows as demand for dollar higher
SINGAPORE (AFP): The Malaysian ringgit and Indonesian rupiah collapsed to new lows yesterday as demand for U.S. dollars and renewed jitters sent the greenback soaring against regional currencies, dealers and analysts said.
The ringgit fell to as low as 3.2000 to the dollar and the rupiah sank to 3,220, before closing at 3.1950 ringgit and 3,1950 rupiah per dollar, dragging other weary Southeast Asian currencies down with them in the process.
Since the regional financial crisis began with the Thai baht's de facto devaluation on July 2, the Malaysian currency has lost almost 27 percent of its value, while the Indonesian unit has lost 31 percent.
"This is beyond rational thinking already," said Sani Hamid, an emerging markets analyst with research house Standard and Poor's MMS in Singapore.
"You cannot pin it down to anything. The general sentiment among dealers is no one wants to be short (on the dollar)," he said.
"It's Monday. The first thing you do when you come in is to look for a reason to buy dollars and any little excuse is an excuse."
He said the fact it was nearing the end of the month and the end of the third quarter stoked demand for dollars from companies. Liquidity in Malaysia and Indonesia also prompted dollar buying, he added.
The Singapore dollar, tracking the other regional currencies, closed lower at 1.5285 to the U.S. dollar, from its close last week of 1.5230. It hit a low of 1.5350 yesterday.
The Philippine peso fell to as low as 34.01 to the dollar before closing at 33.99. Analysts attributed its weakness to the after-effects of last Friday's downgrade of the country's long- term foreign and local currency credit outlook by rating agency Standard and Poor's, after a downgrade of Malaysia's outlook.
The Thai baht also ended lower yesterday but was comparatively stable at 35.75 to the dollar offshore, from its close of 35.20 last week, after the Thai parliament over the weekend approved a new "anti-sleaze" constitution and voted down a censure motion against Premier Chavalit Yongchaiyudh.
Maya Pinto, regional economist with British financial house I.D.E.A., said a combination of factors caused fresh weakness in southeast Asian currencies and predicted volatility for the rest of the week.
"In Indonesia there are worries over the financial sector. Some banks are facing liquidity problems," she said.
"The Thai baht is pretty strong because the weekend political developments came in as expected," she said. "There are no unpleasant surprises."
She said part of the reason the ringgit was weak was that Malaysian Foreign Minister Adbullah Ahmad Badawi issued another attack on foreign currency speculators over the weekend.
In a hard-hitting speech to the UN General Assembly session Friday, the minister repeated his government's accusations against foreign speculators.
Recalling the recent plunge of stock prices and the fall of the Malaysian ringgit, the minister said the sequence of events "did not take place as a result of war, conflict, natural disaster or mismanagement.
"It was precipitated by currency speculators, indeed manipulators, who driven by sheer greed took advantage of the vulnerabilities of developing economies especially the fragility of their nascent financial markets," he said.
Malaysia has come under market pressure to put its economy in order and avoid policy flip-flops that have alarmed the market.
The ringgit was clobbered earlier this month after Malaysian Premier Mahathir Mohamad called for curbs on currency trading. Aides later said there was no plan to impose market controls.