SE Asian currencies hit new lows
SE Asian currencies hit new lows
SINGAPORE (Reuter): The bedlam spreading through Southeast Asian currencies showed no signs of easing yesterday as Malaysia's efforts to prop up its collapsing stock market worsened investor sentiment for the region.
The already damaged benchmark Kuala Lumpur index dived to its lowest level in four years, dropping by as much as 10.07 percent at one point during the day before pulling back to close 2.62 percent down.
The ringgit crashed through the 3.00 per dollar just before 0400 GMT and then extended its drop to a new all-time low of 3.0500. It also hit a new low against the Singapore dollar.
It has lost more than two percent against the U.S. dollar in less than a day and a fifth of its value since Southeast Asia's currency mayhem began in July.
"It's all sentiment driven now. If sentiment for the region continues to be weak, we could find further pressure coming through," said Song Seng Wun, regional economist at ABN-Amro Hoare Govett.
Dealers and analysts said the market was spooked by Malaysia's threat to use the Internal Security Act, which allows for virtual indefinite imprisonment without trial, against market "manipulators".
Prime Minister Mahathir Mohamad's attempt to bolster confidence with a huge stock market rescue plan achieved little, meeting with skepticism at best.
"What the market wants to know is if the 60 billion ringgit rescue package the Prime Minister announced for the stock market yesterday will succeed or not," said Ishak Ismail, market intelligence analyst at I.D.E.A.
"The currency market is now paying a lot of attention to what's going on in the KL stock market," a U.S. bank dealer in Singapore said.
"The 3.1 (dollar/ringgit) level is not far away at all. It's really a question of where we go from there," he added.
The Thai baht and Philippine peso were also driven to new lows of 38.30 and 32.43 per dollar respectively.
Bangkok dealers said political uncertainty and commercial demand for dollars continued to cloud the baht's outlook.
But talk of possible central bank intervention above the 38.50 level and newly proposed measures to encourage exporters to repatriate overseas earnings could give the baht some relief.
In the Philippines, the central bank was heard to have sold dollars around the 32.43 and 32.39 peso levels, helping revive the peso, if only for the short term.
In stark contrast, the Indonesian rupiah maintained a healthy tone as the market responded positively to an economic reform package and central bank interest rate cuts.
"Indonesia is taking some real steps, rather than Mahathir's side-show of addressing the wrong issues," a senior European bank dealer in Singapore said.
The rupiah was at 3,030/40 to the dollar at 1015 GMT against 3,020/30 late on Wednesday. Jakarta stocks ended 4.15 percent higher.