SE Asian currencies fragile despite IMF bid of confidence
SE Asian currencies fragile despite IMF bid of confidence
SINGAPORE (AFP): Southeast Asian currencies could face new
tests despite a thumbs-up from IMF chief Michel Camdessus amid
turmoil in North Asia and fears that financial malaise could
creep worldwide, bankers said.
The managing director of the International Monetary Fund (IMF)
toured Southeast Asian countries last week to meet presidents and
prime ministers, lauding their efforts to put their economies
back into shape.
He predicted a new period of sustained high growth after a
short and sharp adjustment, but his optimism failed to rub off on
regional currencies.
"He has to say such things," said a Singapore-based currency
analyst who remained pessimistic about short-term prospects.
Malaysian Premier Mahathir Mohamad, who accuses foreign
speculators of bringing down the currencies, said over the
weekend that depreciation may have wiped off some US$200 billion
from the wealth of Southeast Asian nations.
Those behind the downfall of the region's currencies since
July would "soon find that by making us poor, they will lose this
market," he warned.
The Thai baht eased to 38.80 to the dollar offshore last
Friday -- after surging to around 37 to the dollar at the start
of the week -- as euphoria over the return to power of former
premier Chuan Leekpai dissipated.
What remains to be seen is whether the appointment of a new
Thai cabinet after markets closed Friday will inject strength
into the baht this week.
The Indonesian rupiah, boosted earlier by a massive IMF-led
rescue package, ended lower Friday at 3,440 to the dollar amid
lingering concern over local banks.
The week before, it had closed at 3,280 following concerted
intervention by the central banks of Indonesia, Singapore and
Japan as part of an IMF-engineered economic rescue plan.
The Malaysian ringgit ended the week at 3.3200, lower than its
close of 3.3000 the week before, despite an IMF assurance that
the country needed no emergency help. The Singapore dollar closed
lower at 1.5815 from 1.5675 the week before.
The Philippine peso was one bright spot, thanks to rising
remittances of overseas workers ahead of the largely Roman
Catholic country's irrepressible Christmas binge. It ended the
week at 33.98, up from 34.85 the week before.
Tan Kee Wee, an economist with the United Overseas Bank, one
of Singapore's top banks, said that "as calm has not really
returned to the Asian region yet, there is every possibility"
that regional currencies "could go into another tailspin this
week."
Daragh Maher, an economist with Dutch bank ING Barings, said
sentiment on most Southeast Asian currencies "is still quite
fragile."
"We might not see the same degrees of volatility but a drift
weaker in most regionals is quite likely," he said, adding that
the impact of the currency crisis was just "beginning to feed
through" the economies.
Eddie Lee, regional economist with investment house Vickers
Ballas, said: "I'm not looking for a quick rebound at this point.
North Asia has become a big question."
Much attention was focused on the Japanese yen last week after
it fell past the 125 to the dollar level amid weakness in the
Japanese stock market.
The South Korean won came within a hair of falling past the
1,000 to the dollar level but was pulled from the brink by the
central Bank of Korea. It ended Friday at 986.50 to the dollar.
The Taiwan dollar, bumping around 10-year lows amid pressure
on its two neighbors, closed the week at 31.24 to the dollar and
was expected to test the 32 level despite warnings of central
bank intervention.
U.S. Federal Reserve Chairman Alan Greenspan told the U.S.
Congress that the impact of Asia's economic turmoil has been
"modest" but not negligible, adding that U.S. exports could be
"muted" depending on the extent of the Asian slowdown.
U.S. rating agency Standard and Poor's (S and P) said the pain
inflicted on investors by economic turbulence in East Asia was
turning many bank loans sour, and the risk may spread to banks in
other regions of the world.