SE Asian financial marts brace for volatile trading
SE Asian financial marts brace for volatile trading
SINGAPORE (AFP): Southeast Asia's financial markets braced yesterday for volatile trading this week after regional currency turmoil took a toll on stock prices which plummeted on massive redemption by foreign funds.
Dealers said all eyes would be on the Malaysian ringgit, Indonesian rupiah and the Thai baht, all of which slumped to record lows against the US dollar last week, amid speculation the currencies had not reached a rock bottom level yet.
Today is to be a holiday in Malaysia, which marked 40 years of independence Sunday, and in the United States which would have a long Labor Day weekend.
But as Kuala Lumpur and New York had helped set the pace in Southeast Asian stock and currency trading last week, the thin market on Monday could cause greater volatility to the region's already bruised markets, analysts said.
"Thin trading conditions can actually exacerbate the volatility," said Andy Tan, general manager of US research house Standard and Poor's MMS in Singapore.
Analysts said it would be difficult to pin point which of the regional currencies would come under attack this week as none of them were spared since Southeast Asian foreign exchange turmoil erupted with the Thai baht float on July 2.
"There seems to be a pattern of rotational attacks on regional currencies. It would probably be futile to try to second guess which currency will fall prey this week," Tan said.
The ringgit tumbled to a new record low of 2.9620 against the US dollar on Friday before recovering to 2.9000 while the rupiah plummeted to an all-time low of 3,050 before ending at 2,957.
The Thai baht also dipped to a record low of 34.50 before recovering a little to end at 34.20 while the Singapore dollar dived to a 38-month low of 1.5370 on Friday before closing Asian trading at the 1.5115 level.
"In thin markets, it's so easy to move currency markets, with 50 to 100 million dollars, you can hammer currencies down," a dealer with a European finance house said.
Dealers said Malaysian Prime Minister Mahathir Mohamad's denial over the weekend that his deputy, Anwar Ibrahim had resigned amid Kuala Lumpur's stock market and currency crisis could dampen sentiment for the ringgit as well as Singapore stocks.
Malaysia's imposition of share trading curbs to shore up the stock market, coupled with warnings by Mahathir of more such controls to check what he termed manipulation by foreign fund has already taken a toll on neighboring Singapore shares.
The Stock Exchange of Singapore's blue-chip barometer, the Straits Times Industrials index, lost 7.2 percent last week and stands at the lowest point since early 1993.
Foreign investors also started bailing out from regional bourses fearing other countries would emulate Malaysia and impose more capital and foreign exchange controls to check currency and share price slides, analysts said.