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.