SE Asian currencies revive as KL backs off
SE Asian currencies revive as KL backs off
SINGAPORE (Agencies): Southeast Asian currencies were lifted yesterday after Malaysia's reversal of a week-old decision to curb short-selling of blue-chip stocks brightened sentiment.
The benchmark Kuala Lumpur stock index ended up 12.37 percent at 821.59, racking up its biggest single-day gain since January 1994.
The share market strength helped the ringgit shoot to a high of 2.9270 per dollar in early trade before slipping off again. It was quoted at 2.9310/90 at 0945 GMT against 3.0340/90 late on Thursday.
"The move on the KLSE (Kuala Lumpur Stock Exchange) was viewed as very positive by offshore players," said Maya Pinto, regional economist at I.D.E.A.
She said the ringgit would remain volatile, but it was not likely to head back towards Thursday's low of 3.05 in a hurry.
Analysts said the regional units were not out of the woods yet despite their first collective rise against the greenback since foreign exchange turmoil erupted in the region with Thailand's de fact devaluation of its currency on July 2.
"The road ahead for the regional currencies is still paved with numerous obstacles. It hinges on how they address their own underlying economic problems," warned Andy Tan, general manager of U.S. research house Standard and Poor's MMS in Singapore.
The Philippines stressed yesterday that it would allow market forces to determine the level of the peso, which was effectively devalued after the baht, but will use effective monetary policy to avoid a freefall.
Low said more of these "encouraging signals" would draw back foreign investors and restore confidence in the regional economies.
The Thai baht rose as concerns about whether parliament would approve a new draft constitution subsided, on the second day of debate.
The baht was at 36.95/37.20 to the dollar onshore from 37.50/37.80 late on Thursday. It was at 35.20/50 offshore.
"The baht's rebound is in line with other currencies in the region. The market's concern about the constitution debate is also easing," a foreign bank dealer in Bangkok said.
Politicians opposed to the reforms, which call for a revamp of the political system and an end to money politics, appeared to tone down their stance yesterday after top financial and military officials expressed support for the new constitution.
Finance Minister Thanong Bidaya said on Thursday uncertainty on how the debate would end had kept the baht near its new record low of 38.30. "Whether the baht will stop falling will depend on whether political problems will ease," he said.
The Indonesian rupiah held up well as the market was heartened by the government's austerity package. The rupiah was at 2,970/80 to the dollar against 3,035/45 late on Thursday.
"The rupiah strengthened because of overnight gains in New York and also because of a recovery in the ringgit," a local bank dealer in Jakarta said.
The Philippine peso finished firmer at 32.365 against Thursday's 32.38 close after the central bank intervened to sell an estimated $18-$25 million at 32.305 and 32.3075 pesos.
The South Korean won remained weak in anticipation of dollar demand for importer deals due at the weekend and next week.
The central bank sold dollars at between 908.20 and 907.00 won just before the end of trading to curb the won's fall.