SE Asian currencies depressed

SE Asian currencies depressed

SINGAPORE (Reuter): The Singapore dollar's sudden drop through
a key support level yesterday weighed heavily on other Southeast
Asian currencies by triggering fresh buying of the U.S. dollar
across the board.

The Singapore dollar fell through the psychological 1.50 to
the U.S. dollar level in early trade and then slid to a 37-month
low of 1.5140 on stop-loss sales before recovering a little.

Dealers attributed the bulk of the move to comments by a
Monetary Authority of Singapore official who told reporters at an
economic briefing that the Singapore dollar's level was
appropriate to what was happening in the market.

The official of the de facto central bank said the U.S. dollar
had been rising in currency markets and the Singapore dollar had
depreciated by about five percent against the U.S. unit since the
start of 1997.

The Singapore dollar was quoted at 1.5075/105 to the U.S.
dollar at 0855 GMT against 1.4850/70 before the comments and
dealers said it was likely head towards 1.53.

They said the market shrugged off news that Singapore's
manufacturing sector expanded by 3.2 percent year on year in the
second quarter of 1997 after three consecutive quarters of
decline.

Singapore Prime Minister Goh Chok Tong said on Friday the
economy was expanding faster than expected and would grow at
between six and seven percent in 1997.

"They're supposed to be good figures but now the market is
very short of (U.S.) dollars and nobody is looking at
fundamentals at the moment," a U.S. bank dealer said.
They said the drop in the sturdy Singapore dollar had set off
selling of other Southeast Asian currencies as players
increasingly grouped the region's economies together.

The U.S. bank dealer said the market was still short of U.S.
dollars and a lot of long-term players, portfolio managers and
corporations were looking to hedge their exposure.

The lack of aggressive intervention by Southeast Asian central
banks was also playing a part in keeping regional currencies
depressed, he said.

"The central banks realize that intervening aggressively just
gives the speculators a chance to buy cheap dollars. So they're
letting demand and supply determine the correct levels."

The Malaysian ringgit recovered some composure after hitting a
42-month low of 2.7930 to the dollar in early trade.

The Indonesian rupiah remained weak after coming under early
pressure on spillover weakness from the ringgit and Singapore
dollar. It was quoted at 2,641/44 against an early low of 2,655.

Analysts said the central bank's move to cut short-term
interest rates on Friday sent a signal to the market that it was
not prepared to defend the rupiah at the expense of economic
growth.

The Thai baht continued to look weak, but trading in the
currency was subdued with the Thai market closed for a holiday.
Dealers said talk of an impending Thai cabinet reshuffle had
little impact as the market had largely priced it in due to the
country's economic crisis.

The baht remained uninspired by news that the International
Monetary Fund and other Asian donors pledged a $16 billion loan
package to Thailand on Monday.

The Philippine peso weakened on heavy commercial demand for a
dollar in short supply. The peso was at 28.729/800 to the dollar
at 0855 GMT against its previous close at 28.57.

Only the Taiwan dollar firmed as the central bank made its
presence felt and domestic money market rates rose. It ended at
T$28.718 after hitting a day low of T$28.765 against a previous
close at T$28.728

Market -- Page 11