Rupiah and won plumb new depths
Rupiah and won plumb new depths
SINGAPORE (Reuters): The Indonesian rupiah and South Korean won plumbed new depths yesterday but elsewhere on the Asian currency scene the Malaysian ringgit managed a solid gain, analysts said.
The rupiah's recent dire performance continued with a vengeance and intervention by Bank Indonesia failed to stop the rot.
Reports that President Soeharto had been advised to take a 10- day rest unsettled the market but the underlying worries about the scale of private sector debt is the main driving force.
Analysts reckon Indonesian firms have run up around $65 billion in overseas debt and about half of it remains unhedged.
This obviously bodes ill for the rupiah and is raising fears of a swathe of corporate defaults.
"It really is a bad situation and the unhedged debt is substantial," said a Singapore-based analyst who recently returned from a trip to Indonesia. "Against this background investor confidence will remain weak and it is hard to call a bottom for the rupiah."
In late business the rupiah was trading around the day's low of 4,145 per dollar, nearly 3.5 percent down on Friday's close.
In South Korea, the International Monetary Fund (IMF) loan honeymoon appeared to be over. The won dived to close at a historic low of 1,342.40 per dollar.
The central bank stepped in to sell dollars at 1,340 won but traders said it was like standing in front of a train.
The unrelenting fall of the won came amid fears that more banks and finance companies face bankruptcy in the wake of the IMF's $57 billion bail-out package last week.
The collapse of South Korea's 12th largest industrial conglomerate, Halla Group, on Saturday after defaulting on loan payments triggered a rush into dollars by exporters and by importers for future payments.
South Koreans vote in presidential elections on December 18 and the impression was that some IMF conditions to overhaul the financial system could be renegotiated by the new government, analysts said.
"The market is still a little nervous of that as well and generally the behavior by exporters in Korea is to hold on to dollars as long as they can," said Kobus van der Wath, chief treasury economist with Standard Chartered Bank in Singapore.
"The market fully realizes that with the Halla Group becoming another casualty on Friday there is a lot of debt that will become more difficult to service."
The Malaysian ringgit had a brighter day with a rise to 3.6600 per dollar from 3.7180 late on Friday.
It firmed in reaction to a package of economic measures put in place by Finance Minister Anwar Ibrahim last week aimed at calming the overheating economy.
"The measures were pretty well received. It was one sign the government recognized the problems," said a dealer with a Japanese bank.
A surge on the Kuala Lumpur stock market, up 14 percent at one stage in reaction to the package, helped push up the ringgit.
Thailand's baht ended steady after an initial slide, finding support from news that only two of 58 finance companies would be allowed to reopen.
The market had expected more of the firms to be allowed to resume trading and were pleasantly surprised by the government's tough stance.
The baht was at 41.850/000 per dollar onshore against 41.75/41.85 late Friday.
The offshore rate was 41.200/300 against 41.60/41.70. The Singapore dollar dipped in choppy activity on the won's losses and in response to Trade and Industry Minister Lee Yock Suan's comments on Sunday the government would review its three- week-old 1998 economic growth forecast of five to seven percent.
Dollar/sing was quoted at 1.6175/90 against an early 1.6215, after profit-taking on dollar positions.
Taiwan's dollar also slipped in sympathy with the won to T$31.900/909 per dollar compared with Saturday's T$31.775 close. Asia forex desk +65-870-3840