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.