SE Asian currencies on slippery ground
SE Asian currencies on slippery ground
SINGAPORE (Reuter): Southeast Asian currencies remained on
slippery ground yesterday after coming under renewed pressure as
the Thai baht slid to new lows.
Poor market liquidity and wide spreads added to market
volatility as players turned increasingly nervous ahead of an
Asian central bankers meeting in Shanghai on Friday.
Dealers said expectations the meeting might produce some form
of coordinated intervention to counter the speculative onslaught
on the region's currencies kept the dollar in demand.
"The big issue for the market at the moment is this meeting in
Shanghai as there is the possibility of concerted intervention or
a statement that they are willing to join hands to support
currencies," said Chiang Yao Chye, economist at CIBC Wood Gundy
in Singapore.
The Thai central bank intervened to stem the baht's slide as
it was pulled down by heavy commercial demand for dollars.
"We noticed the central bank intervened to stop the baht's
fall at around the 32.50/32.60 to the dollar level," a senior
dealer at a local bank in Bangkok said.
The baht hit a record low at one point with some dealers
reporting transactions at as low as 32.60 to the dollar. At 1050
GMT, it was quoted at 32.250/32.550 onshore and 31.500/31.550
offshore.
Dealers attributed the sharp plunge in the onshore market
mainly to sales by importers seeking dollars to pay their bills
and by corporations needing the dollar to repay foreign loans.
They said the central bank did not need to sell large amounts
of dollars to curb the fall because the pressure was mainly from
local players trading in small amounts.
A senior Thai central bank official attributed the baht's weak
tone to poor first-half earnings reported by local banks and
finance companies.
The Singapore dollar succumbed to fresh selling after comments
by Finance Minister Richard Hu which players treated as yet
another signal to buy the U.S. dollar.
Hu told parliament Singapore dollar's exchange rate was
determined by market forces and its recent appreciation against
its neighbors, especially the baht and Indonesian rupiah, did not
pose a significant threat to its competitiveness.
"Our exchange rate policy should not be guided by short-term
expediency considerations. We always focus on managing the
exchange rate of the Singapore dollar on a trade-weighted basis
with a medium-term perspective," Hu said.
The Singapore dollar fell to a low of around 1.4690 to the
U.S. dollar after the comments, compared with 1.4645 earlier.
The Malaysian ringgit was hit by fresh waves of selling by
offshore U.S. banks despite talk that the central bank had
intervened to sell dollars around 2.6350/70 ringgit.
The ringgit was quoted at 2.6355/85 to the dollar against a
morning low of 2.6230.
"We are not sure if there is any intervention at all. The said
banks could be taking their own positions," a dealer at a
Malaysian bank in Kuala Lumpur said.
The Indonesian rupiah remained weak after being dragged down
by the slump in the baht. Spot rupiah was at 2,587/97 against an
opening of 2,570/80.
"We saw some central bank intervention at the 2,580 level
which helped boost the rupiah to 2,540 level in late morning, but
uncertainty in Thailand kept the dollar tone biddish," a U.S.
bank dealer in Jakarta said.
"If the rupiah could break the 2,500 resistance level, then
there is potential for a strong comeback. But if it falls below
the 2,600 level, speculators would launch an attack to test the
band again," a local bank dealer said.
The Philippine peso fell on commercial demand for dollars,
closing at 28.50 to the dollar against 28.15 previously.