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.