SE Asian currencies plunge, rupiah low

SE Asian currencies plunge, rupiah low

SINGAPORE (AFP): Key Southeast Asian currencies plunged
yesterday with the Indonesian rupiah hitting an all-time low and
no immediate relief in sight for the regional currency turmoil,
dealers said.

"One thing we can see from this recent weakness is that the
whole episode has not blown over yet," Andy Tan, general manager
of U.S. investment house MMS International, told AFP.

"We expect to see continued uneasiness in the future direction
of the Southeast Asian currencies."

The usually unflappable Singapore dollar sank past the
sensitive 1.4600 level to a 31-month low of 1.4665 to the U.S.
dollar as the market braced for intervention by the powerful
Monetary Authority of Singapore (MAS).

Dealers said the Malaysian ringgit plunged to a 38-month low
Friday to 2.6080 to the U.S. dollar from its Thursday close of
2.5885.

The rupiah also sank past the psychological 2,480 level to an
historical low of 2,493 against the U.S. dollar from its Thursday
close of 2,476.50.

The Thai baht traded around 30.10 from 30.22 on Thursday and
the Philippine peso was at 28.08 from 28.57 on Thursday.

Much of the slide among regional currencies has been
attributed to speculation-driven U.S. hedge funds whose
unrelenting attacks had been blamed for the de facto devaluation
of the baht on July 2 and the peso July 11.

The baht has now fallen by about 16 percent since the Thai
central bank let market forces determine its value while the peso
has dipped by about seven percent.

The regional currency turmoil has led to fears of rising
inflation, slower economic growth and a pullout of foreign
investments in Southeast Asia.

"The trend is quite obvious, and that is to buy the dollar as
the regional currencies continue dipping," said Jacqueline Ong,
regional economist with British finance house I.D.E.A.

Dealers said they were surprised the Malaysian and Singaporean
central banks had not yet intervened to check their currencies'
slide.

"Although the central banks had kept a relatively low profile
in recent days, we would not rule out stronger interventionist
measures from the different central banks," Tan of MMS
International said.

Malaysia's central Bank Negara had not intervened in the
market this week, although it had spent several billion dollars
buying the ringgit soon after it came under pressure from the
baht's de facto devaluation.

Bank Negara's hands-off policy and the central Bank
Indonesia's reported statement Thursday that it was not setting a
target for the depreciation of the rupiah had unwittingly
signaled the market to sell the currencies, analysts said.

Indonesia's policy is to allow the depreciation of the rupiah
by between three and five percent annually to achieve export
competitiveness but the rupiah has dipped by five percent already
so far this year.

Ong of I.D.E.A. said that the Thai baht would remain "very
weak" because the Thai central bank had failed to provide any
concrete plan to revive the ailing economy.

"We have seen a lot of reiteration but no concrete plans, so I
think the market is quite concerned and this will limit the scope
for the baht to gain strength," Ong said.