Southeast Asian currencies fragile as despair
Southeast Asian currencies fragile as despair
SINGAPORE (Reuters): Southeast Asian currencies kept their heads bowed yesterday as North Asia's nervous markets hogged center stage and the previously sanguine Australian dollar looked set to join the fray.
Dealers and analysts said the market remained concerned about a fresh assault on the Hong Kong dollar despite its relative stability on Monday and fierce denials from the territory's officials that they would consider scrapping the currency's 14- year link to the U.S. dollar.
"The only people who will be burned by speculation against the Hong Kong dollar are the speculators," Hong Kong Financial Secretary Donald Tsang told an investment funds conference. But analysts said more pain was in store.
"The battles are not over on the Hong Kong dollar peg. There are quite a few hedge funds positioned further along the curve," said Simon Mahadevan Flint, senior emerging markets economist at research firm I.D.E.A.
"Hong Kong's likely to undergo some fairly serious asset deflation pain as a result of the battle over the Hong Kong dollar and that in itself may weaken sentiment," he added.
Hong Kong overnight interest rates, which shot to highs of 300 percent last week as the monetary authority moved to fend off speculators, slid to around 7 percent on Monday.
The Hong Kong dollar was at 7.7265/15 to the U.S. dollar at 0930 GMT against 7.7280/90 late on Friday. The blue chip Hang Seng Index lost 5.80 percent to close at 10,498.20 on selling by fund managers and derivatives-linked trading.
Meanwhile, the beleaguered South Korean won plunged to a historic low of 942.00 per dollar and only managed to recover some ground after the central bank intervened repeatedly.
The won ended at 939.90, sharply down from Friday's close at 929.50. A central bank official said the bank would stop the won from falling below the 940 level.
The regional currency crisis looked set to cast its tentacles even further afield as worries about North Asia's growing problems squeezed the Australian dollar to a 46-month low of 68.67 U.S. cents on Monday.
Australia is the world's third largest gold producer after South Africa and the United States.
In Southeast Asia, the staid Singapore dollar had a relatively volatile session, hitting an early low of 1.5920 to the U.S. dollar.
Dealers and analysts said there was nothing new about the comments but they gave players an excuse to buy the U.S. dollar, with an eye to pushing it to the market's target of 1.60 Singapore dollars. It was at 1.5823/33 at 0930 GMT against a low of 1.5970 last week.
The Malaysian ringgit firmed to 3.3560/90 to the dollar from 3.3850/900 five hours earlier, partly due to rumors Malaysia might hike interest rates, Singapore dealers said.
The rupiah was at 3,560/70 to the dollar, slightly firmer than its late Friday levels of 3,575/80.
The Thai baht was steady at 38.45/55 to the dollar onshore and firmed to 38.35/45 offshore as new Finance Minister Kosit Panpiemras took office with promises of strict fiscal discipline.
The Philippine peso was weak at 35.210/300 to the dollar, but off its lows after the central bank sold dollars at 35.50 pesos in early trade to curb pressure on the peso.