SE Asian currencies hit new lows as gloom lingers
SE Asian currencies hit new lows as gloom lingers
SINGAPORE (Reuter): Southeast Asian currencies hit new lows
yesterday as persistent gloom in regional markets spurred fresh
buying of the U.S. dollar.
Dollar demand from companies needing to hedge positions in the
middle of increased currency volatility also weighed on the
market, dealers said.
"With the crisis in regional currencies still carrying on,
speculators and corporates cannot afford to be short dollars," a
European bank dealer in Singapore said.
The Malaysian ringgit fell to an all-time low of 2.8300 to the
dollar in late trade despite comments by Finance Minister Anwar
Ibrahim that would normally have lifted it.
He said the government would announce tough measures to deal
with a current account deficit in the next few weeks and that a
100,000 ringgit levy on foreigners buying properties for more
than 250,000 ringgit would be lifted from August 28.
"This should have been good news for the ringgit. But we're
still seeing heavy buying by U.S. funds in the dollar/ringgit
forwards," a U.S. bank dealer in Singapore said.
He said an increasingly bearish view of the ringgit against
the Singapore dollar was also preventing a ringgit recovery.
"People are talking about a target of 0.5250 for
ringgit/Sing," he said. The cross was at 0.5313/26 at 1005 GMT.
Some dealers attributed the ringgit's drop to growing anxiety
that Malaysia would post a trade deficit for July, partly due to
the ringgit's weakness in recent months.
It was quoted at 2.8240/90 to the dollar against 2.8030/60 a
few hours earlier. The currency has now dropped almost three
percent against the dollar in less than a week.
Its tumble yesterday knocked the wind out of the Singapore
dollar, pushing it through the 1.50 level against the U.S.
dollar. The Singapore dollar was at 1.5030/40 against 1.4985/95
earlier in the day.
The Philippine peso staged a partial recovery after the
central bank intervened to sell dollars as the peso hit a new low
of 30.45 to the dollar on expectations that money would flee the
battered stock market in ever greater quantities.
The Indonesian rupiah was pulled out of a brief reprieve by
the ringgit's sharp drop. It slipped back near its day lows of
2,870/80 after firming to 2,837/47.
Relatively stable money market conditions in the afternoon had
prompted the rupiah's recovery, but dealers said it remained
likely to test the 3,000 level.
The Thai baht slipped in late trade as players awaited the
release of monthly economic data on Thursday.
The baht was at 34.00/20 to the dollar onshore against
33.85/95 six hours earlier. It was at 33.70/90 offshore against
33.52/62.
A top International Monetary Fund (IMF) official said half to
two-thirds of forward foreign exchange contracts the Bank of
Thailand (BOT) entered into may result in reserve losses.
Hubert Neiss, Director of the IMF's Asia and Pacific
Department said, however, that the Bank of Thailand (BOT) would
draw on an IMF-arranged financing package to help offset the
payment of these forward liabilities.
"As a result, the foreign exchange reserves of the BOT will
remain throughout the period at a comfortable level, around four
months of imports," Neiss said.
The South Korean won failed to take heart from a Finance
Ministry promise not to allow the won to fall sharply. It ended
at 902.80 against a previous 900.50.
Dealers said players felt the government was more interested
in managing the pace of a won depreciation than in reversing the
downward trend.
The central Bank of Korea has sold more than $1 billion to
defend the won, which fell to a historic low of 909.50 on
Tuesday.