SE Asian currencies still in trouble
SE Asian currencies still in trouble
SINGAPORE (Reuter): Southeast Asian currencies continued to be hit by poor investor sentiment yesterday despite government attempts at the weekend to calm volatile markets.
Thin trading volumes exaggerated movements but dealers said the dollar remained in favor after Indonesia's move to float the rupiah pushed other currencies to record lows on Friday.
Market players have lumped the region's economies together and analysts said Southeast Asian currencies could weaken further as most participants were now ignoring fundamentals.
"They're trying to get used to the floating currency regimes in the region. It might take another six months for the markets to stabilize because these central banks have shown they can be melted under pressure," said Chia Woon Khien, head of Asian research at Skandinaviska Enskilda Banken.
Chia said worries about maintaining competitiveness had led to a chain reaction, prompting central banks to either float their currencies, amounting to a devaluation, or allow them to weaken against the U.S. dollar.
The Indonesian rupiah tested a fresh low of 3,000 to the dollar Monday afternoon as players continued to sell the currency in thin trade. The rupiah was quoted at 2,970/80 at 0930 GMT against 2,955/65 around midday.
Jakarta stocks also remained under pressure for most of the day. The composite index fell more than 8 percent to a low of 565.78 at one stage.
Dealers said the market largely ignored President Soeharto's comments on Saturday that Indonesia would maintain tight monetary and fiscal policies until the rupiah stabilized.
"There are still a lot of Jakarta corporates who are short of dollars and haven't done enough hedging. The dollar is looking quite well bid at the 2,890 level," a U.S. bank dealer in Singapore said.
The Philippine peso also slid to new lows, ending at 30.14 to the dollar against its previous close at 29.80 after falling about 2 percent to 30.40 at one point.
Heavy dollar demand from importers, jitters about the region and the central bank's failure to intervene combined to pull down the peso, Manila traders said.
The Thai baht slithered through the 32 per dollar support level in both domestic and offshore markets on spillover weakness and concerns about the future of the Thai government after last week's cabinet reshuffle.
The baht was quoted at 32.050/150 to the dollar onshore at 0930 GMT against 31.90/32.00 at midday. It was at 32.25/45 offshore.
The baht last breached the 32 level in onshore markets on July 31, representing a depreciation of more than 18 percent from its level before being effectively devalued on July 2.
The Malaysian ringgit slid to a low of 2.7980 against the dollar in afternoon trade, compared with 2.7745/85 earlier.
Dealers said corporate dollar sales out of Kuala Lumpur pushed the ringgit to an early high of 2.75, but it soon slipped back as the market ignored a challenge from Prime Minister Mahathir Mohamad to do its worst.
They said there was little reaction to Mahathir's weekend comments that speculators were welcome to hammer down the ringgit as he was confident of overcoming the crisis.
"The market was a little surprised that nobody was willing to take the dollar higher, so they started selling it off," the U.S. bank dealer said.
The Singapore dollar was off its low of 1.5200 to the U.S. dollar but remained weak at 1.5145/65 at 0930 GMT.
Dealers said the domestic unit was quick to surrender early gains sparked by Senior Minister Lee Kuan Yew's comments on Saturday that the Singapore dollar would recover once upheaval in regional currencies had subsided.