SE Asian currencies upbeat, slightly recover
SE Asian currencies upbeat, slightly recover
SINGAPORE (Reuter): Southeast Asian currencies looked
relatively upbeat yesterday as U.S. funds took more profits
against them and the dollar tumbled against the yen.
But dealers and analysts said there was little scope for an
extended recovery as the market was still very wary about
political and economic developments in the region.
"The prime thing people are looking at is the way Thailand
responds to IMF treatment," said Simon Mahadevan Flint, senior
emerging markets economist at I.D.E.A.
The Thai baht has lost over a third of its value against the
dollar since being effectively floated on July 2, a move which
triggered a crisis of investor confidence in the region.
The International Monetary Fund (IMF) has put together a
US$17.2 billion multilateral aid package to help restore
Thailand's battered economy.
The baht held its ground on Wednesday, the first day of a no-
confidence debate against the government which saw Prime Minister
Chavalit Yonchaiyudh under fire for Thailand's worst economic
crisis in decades.
Dealers said the baht was expected to benefit whatever the
outcome of the debate. The IMF's assessment of Thailand's efforts
to reform its economy also continued to lift spirits.
IMF First Deputy Managing Director Stanley Fischer said on
Tuesday the Fund's reform programs were being implemented rapidly
and the baht had probably overshot a reasonable level.
The baht was at 36.20/36.30 to the dollar onshore at 0950 GMT
against 36.65/36.90 late on Tuesday. Offshore, it was at
35.15/35.25 against 35.25/35.45.
The shaky Malaysian ringgit, which led other regional
currencies down sharply early in the week, bounded to an early
high of 3.02 to the dollar in early trade -- a rise of over three
percent from its record low of 3.13 in New York on Monday. It was
at 3.0400/50 against 3.0550/600 late on Tuesday.
"We don't necessarily see the ringgit stabilizing here ...
There's still plenty of pessimism and concern out there," said
I.D.E.A.'s Flint, citing low Malaysian yields and prospects of
more regional turmoil as factors weighing on the ringgit.
"In the short term, we're looking at a range of 3.03-3.09. But
in the next few weeks, 3.15 is probably not unreasonable."
Finance Minister Anwar Ibrahim helped the ringgit by saying
said the market turmoil had not damaged Malaysia's real economy
and he expected the country to report an increased budget surplus
this year and next following spending cuts.
He also repeated that there had been no change to foreign
exchange trading rules -- an effort to calm nervous investors
after Prime Minister Mahathir Mohamad suggested Malaysia should
limit currency dealing to what was needed to finance trade.
U.S. Treasury Secretary Robert Rubin helped by saying Malaysia
was committed to working with the international community to
stabilize its markets and fix the economy.
The Singapore dollar pared early gains, driven by stop-loss
U.S. dollar sales below the 1.51 level which pushed it to a high
of 1.5075.
It was at 1.5120/30 by 0950 GMT as U.S. funds went back to
buying the ringgit/Sing cross from the 0.4950 level. The cross
reached a record low of 0.4880 early this week.
The Indonesian rupiah softened as overnight rates slid to 16
percent from 20/25 percent in early trade due to ample money
market liquidity. The rupiah was at 3,010/20 after opening at
2,965/70 against 2,995/3,000 late on Tuesday.