SE Asia currencies ease on Thai, RI rumors
SE Asia currencies ease on Thai, RI rumors
SINGAPORE (AFP): The Thai baht and other regional currencies eased against the U.S. dollar in rumor-driven Singapore trading yesterday amid concerns over the political and economic situation in Thailand, dealers said.
Talk surfaced on the offshore market that some Indonesian banks were facing liquidity problems amid bad debt fears, dragging down the Indonesian rupiah while sentiment on the Thai baht was weak, the dealers said.
"There was a mixed bag of rumors," said a dealer with a U.S. finance house. "In the morning, we heard rumors about a military coup (in Thailand), This afternoon people were spreading rumors about riots and food shortages."
"The situation in Thailand may be bad but not so bad," the dealer said.
The market was also uneasy following news that Thailand's King Bhumibol Adulyadej had summoned Prime Minister Chavalit Yongchaiyudh to the palace to report on the economy.
The baht ended weaker at 31.025 to the U.S. dollar from 30.70 at the start of trading, and 30.80 at Wednesday's close here.
The rupiah hit a low near 2,600 to the greenback on the unconfirmed talk of some big banks being in trouble before it recovered to 2,590.5, weakening from Wednesday's close of 2,585.
The greenback also strengthened to 1.4730 Singapore dollars from 1.4710 at the previous day's close and 2.6425 Malaysian ringgit from 2.6345.
Alison Seng at MMS International, a unit of U.S. credit-rating agency Standard and Poor's, said the early trade focused on "the onshore developments" in Thailand following Bangkok's decision to accept an International Monetary Fund (IMF) rescue plan.
"There is probably some concern over rumors about the political situation and the economic situation," Seng said.
Dealers said rumors of a military coup, which were denied, and worries about rising inflation and a run on deposits in weak Thai finance firms and banks had weekend market sentiment when trading started Thursday.
Rumors of a Thai public demonstration against finance companies Thursday triggered the baht's slide, said Ishak Ismail, market intelligence analyst at British financial consultancy I.D.E.A.
Ismail said the positive sentiment generated by the IMF credit line of US$12-to-15 billion for Thailand's ailing economy had been dampened by the rumors.
But he said the baht was expected to claw its way back to around 30.65 to the US dollar when such "rumor-generated movements" stopped.
Regional currencies have been under pressure from speculators since the Thai baht's float on July 2, which sliced as much as 29 percent off its pre-float value against the US dollar and raised the exchange-rate risk profile of all of Southeast Asia.
The baht's weakness has been setting the lead for other regional currency movements against the U.S. dollar.
Seng of MMS International said the market was still "looking at the dollar-baht (exchange rate), whether it has finally settled down or not."
She said off-shore sentiment had improved on Bangkok's acceptance of the IMF rescue plan, but concerns remained over "how bad the situation will be in Thailand."
Worries remained over whether "there will be any collapse of some finance firms, and whether there will be political instability and whether the government will be committed to implementing the measures," Seng added.