SE Asian currencies await cues from G7
SE Asian currencies await cues from G7
SINGAPORE (AFP): Southeast Asian currencies are expected to trade cautiously this week while awaiting cues from the world financial jamboree in Hong Kong and political developments in Thailand and the Philippines, analysts said.
The region's currency crisis is expected to be a key topic at the annual meetings of the International Monetary Fund (IMF) and World Bank (WB) in Hong Kong, including discussions among finance ministers from the Group of Seven (G7) industrial powers.
Regional currencies ended relatively stable against the U.S. dollar last week after a short-lived rally was scuttled by renewed selling.
On Friday, the Malaysian ringgit ended at 2.9460 to the dollar from its close of 2.9400 Thursday, the Indonesian rupiah firmed to 2,935 from 2,940, the Singapore dollar eased to 1.5140 to the greenback from 1.5095, and the Philippine peso rose to 32.19 from 32.38. Mixed results were also seen in stock markets.
Southeast Asian currencies have been rocked by turbulence since the Thai baht's effective devaluation on July 2 shook investor confidence in the region, but the past week was comparatively benign following record lows reached in recent weeks.
Alison Seng, an analyst with US-based research house Standard and Poor's MMS, said Southeast Asian markets will monitor next week's G7 talks and other meetings linked to the IMF-WB gathering.
"All the important international agencies will be there," she said. "People will be interested to know what they have to say."
Japanese Finance Minister Hiroshi Mitsuzuka, who will chair the G7 meeting, confirmed the talks will include the Southeast Asian currency crisis.
There have been no indications of what stance the G7 could take but the United States has gone on record as saying that market fundamentals, not speculators as maintained by Malaysia, are to blame for the crisis, which has led to lower economic growth forecasts.
The Thai crisis prompted the IMF to spearhead a 17-billion- dollar rescue package to shore up the economy.
IMF officials said the Fund acted promptly in response to the situation in Southeast Asia and issued warnings in the Thai crisis' early stages, unlike the Mexico peso debacle of late 1994 and early 1995, which caught everyone by surprise.
"There's more contagion than we expected but nothing like 1995," Deputy IMF managing director Stanley Fischer said recently.
A senior economist in Singapore said regional markets were awaiting the results of talks over the weekend between Malaysian leaders and foreign fund managers, who had pulled out of the country earlier this month after being alarmed by what were seen as market-unfriendly moves.
Malaysian Prime Minister Mahathir Mohamad has since backtracked, lifting restrictions on share trading and announcing austerity moves, including postponement of some of his pet projects, to restore investor confidence.
"In Thailand I think the focus will be on the Chaowalit government's ability to ward off challenges," said the economist. "In the Philippines we also have to keep an eye on the political scenario."
The Thai army has found it necessary to tell the public not to worry if they see tanks this week on the streets of Bangkok, saying they will be part of a parade for retired officer.
The top brass also reiterated support for embattled Prime Minister Chaowalit Yongchaiyudh, who is facing a no-confidence vote in parliament.
Philippine President Fidel Ramos, facing one of his most serious political crises, has angered the church and civic leaders, including his predecessor Corazon Aquino, by refusing to rule out seeking reelection.
Ramos supporters are trying to amend the constitution in what is seen as a ploy to circumvent a single six-year term limit on the president. A large protest against the charter changes has been scheduled for Sept. 21.