SE Asian currencies brace for busy week
SE Asian currencies brace for busy week
SINGAPORE (Reuter): The Indonesian rupiah regained its poise
yesterday as the market quickly absorbed news of a ratings
downgrade by Standard & Poor's Corp (S&P), while other Southeast
Asian currencies braced for an event-filled week.
The rupiah was at 3,478/85 to the dollar at 0950 GMT, well
above an early low of 3,625, but off its late Friday levels of
3,350/60.
On Friday, S&P cut its long-term foreign currency rating on
Indonesia to triple-'B'-minus from triple-'B', bringing it in
line with Moody's Baa3 rating.
"The market was caught short of dollars this morning and there
was a lot of stop-loss buying. Then some speculative funds came
in and took advantage of the high rate to sell more than $100
million," a U.S. bank dealer in Singapore said.
Another Singapore dealer said the rupiah recovered as players
realized the S&P move simply placed its rating in line with
Moody's rating for Indonesia.
Rumors that Bank Indonesia had checked rates near the 3,500
level also contributed to the rupiah's recovery, but dealers said
there was little evidence the bank had actually sold dollars.
They said overall sentiment for the rupiah was improving after
the government decided last Wednesday to seek assistance from the
International Monetary Fund (IMF) and other agencies to boost its
reserves and stabilize its financial sector.
Other Southeast Asian currencies were off the highs seen last
week, with some dealers attributing the softer tone to the S&P
news while others said the "contagion effect" was not in play at
the moment.
The Malaysian ringgit was at 3.1330/430 to the dollar, much
below its 3.0500/80 levels late on Friday, as players covered
their positions ahead of the Oct. 17 budget.
Prime Minister Mahathir Mohamad's comments on Friday, which
seemed to suggest certain Jewish groups were out to undermine the
progress of Moslems, could also be weakening the ringgit after
its huge rebound last week, dealers said.
On Sunday, Mahathir denied his comments were aimed at Jews and
said the media had misinterpreted him.
Dealers said the ringgit was unlikely to test new levels in
the build-up to the budget, though this still left it room for
maneuver in a market typified by wide spreads and thin volumes.
The Singapore dollar traded in a subdued fashion and was seen
keeping to a 1.5380-1.5430 range to the U.S. dollar.
The Thai baht slipped as players braced for a much-awaited
finance sector reform package, now due a day earlier on Tuesday.
The baht was at 36.45/55 per dollar onshore against
36.15/36.25 late on Friday. It was at 35.65/36.15 offshore
against 35.65/36.75.
The market showed little reaction to Finance Minister Thanong
Bidaya's announcement of requirements for 58 suspended finance
firms to reopen, as most players opted to wait for Tuesday's
package.
Thanong told a news conference that reopened firms would be
asked to meet capital adequacy ratios of 15 percent in the first
year of operation, 12 percent in the second and 10 percent in the
third.
Dealers said the market would look for indications of when
Thailand might lift its two-tier baht system, as well as details
of planned budget cuts in the reform package.
The Philippine peso ended firm at 32.79 to the dollar against
Friday's 33.52 after the central bank's aggressive dollar sales.
Manila traders said the bank had sold an estimated $81 million
from 33 pesos down to 32.80 pesos.
The Taiwan dollar ended slightly higher at T$28.477 against
last week's T$28.480 as players avoided taking positions against
the currency after the central bank's unflinching defense.