SE Asian currencies take roller-coaster ride
SE Asian currencies take roller-coaster ride
SINGAPORE (AFP): Bruised Southeast Asian currencies went
through a roller-coaster ride yesterday as markets were driven by
fears of central bank intervention and more capital controls
across the region, dealers said.
The Philippine peso dived to a new all-time low, forcing a
suspension of the currency's trading in Manila while the
Singapore dollar sank to levels unseen in 41 months after Finance
Minister Richard Hu said the Singapore unit would be gradually
internationalized.
Earlier, the Singapore dollar together with the Malaysian
ringgit, Indonesian rupiah and the Thai baht, all of which were
hammered down rapidly in recent days, surged against the
greenback amid fears that government would step up foreign
exchange controls.
The fears, coupled with reported market intervention by the
Indonesian and Malaysian central banks to shore up their
currencies, stemmed from a technical glitch by financial news
agency Reuters, dealers said.
The agency had released two sets of quotes for the dollar --
instead of the usual one -- against the ringgit, rupiah, peso and
Singapore dollar.
The dealers said the quotes purportedly for currencies traded
offshore and onshore gave rise to a perception in the market that
governments had moved to impose restrictions on the supply of
their currencies to foreigners.
"The two sets of quotes spooked the market and people started
dumping the U.S. dollar against the regionals," a dealer with a
European financial house said, adding that fears escalated after
reported intervention by the Indonesian and Malaysian central
banks.
The rupiah recovered by a remarkable 5.6 percent to 3,505
against the U.S. dollar in early trading from Monday's record-low
close of 3,715, the Malaysian ringgit was sharply higher at
3.2400 from 3.3700, the Singapore dollar was up to 1.5380 from
1.5516 and the Thai baht offshore rose to 35.10 from 36.70.
"The glitch today was also an excuse for people long on the
U.S. dollar against the regionals to take profit," said Jimmy
Koh, regional economist with London-based financial house
I.D.E.A.
But the regional currencies lost some steam as market players
built up fresh U.S. dollar positions after they came to know of
the glitch and the financial news agency offered a clarification,
dealers said.
"It was a technical hitch on our main Asian foreign exchange
display generated from a computer based in London which ended up
displaying more than one consolidated quote for each of the four
currencies," Miyuki Suzuki, Singapore-based managing director of
Reuters Southeast Asia, told AFP.
The rupiah ended Asian trading at 3,690 against the U.S.
dollar, the ringgit at 3.2750, the baht at 35.80, the Singapore
dollar at 1.5580 and the Philippine peso at 35.40 off their
intra-day lows.
The Singapore dollar hit a 41-month low of 1.5650 after
Minister Hu said in parliament that the Singapore unit would be
slowly globalized but not at the expense of the city state's
economy, dealers said.
Hu said the Monetary Authority of Singapore, the de facto
central bank, will "allow a gradual increase in use of the
Singapore dollar for international purposes" without disrupting
the domestic economy.
Trading of the Philippine peso was suspended twice in Manila
when the currency experienced sharp falls, hitting a new all-time
low of 35.981 against the dollar.
Dealers said heavy demand for U.S. dollars had weighed down
the peso which fell below a "volatility band" that took effect
yesterday, whereby trading temporarily halts if the peso falls
beyond a certain level.
While some analysts said the recovery of some of the regional
currencies yesterday was something temporary, others felt the
worst might be over for the currencies.