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.