Southeast Asian currencies tumble again
Southeast Asian currencies tumble again
SINGAPORE (AFP): Southeast Asian currencies tumbled again yesterday with the Malaysian ringgit slumping to a new record low against the U.S. dollar on a downward revision of Kuala Lumpur's long-term credit outlook.
Fears of an escalating banking crisis and more corporate troubles in the region due to ceaseless currency turmoil also dampened sentiment for the Southeast Asian currencies, dealers said.
The already-bruised ringgit slumped to an all-time low of 3.1450 to the dollar before ending Asian trading at 3.1250 after U.S.- based Standard and Poor's revised Malaysia's long-term foreign currency rating outlook from "stable" to "negative." The ringgit had ended at 3.0475 against the greenback on Wednesday.
Malaysia has come under market pressure to put its economy in order after the ringgit eroded more than 20 percent against the U.S. dollar since July 2, when regional currency turmoil erupted with Thailand's effective devaluation of its baht.
Jacqueline Ong, regional economist with London-based financial house I.D.E. A., said she expected "wild gyrations" over the near term for the regional currencies.
Ong said reports of banks facing liquidity problems in Indonesia and listed companies unable to service their loans in the Philippines haunted the regional currency markets which had been generally calm over the last two days.
Southeast Asia's foreign exchange turmoil was sparked off by Thailand's effective devaluation of its currency on July 2.
Spot rupiah dropped to 3,033 in an early trade but recovered at 3,018/20 against the dollar at midday before closing at 3,027/32.
The Philippine peso ended weaker at 33.43 to the U.S. dollar from Wednesday's close of 33.38 as the Manila stock market dived amid fresh rumors that certain large firms might default on their bank loans.
The Central Bank of the Philippines has said it is considering requiring banks to increase their loan loss provisions to deal with any defaults.
Dealers in Singapore said the market expected more Philippine listed firms to report difficulties in meeting their loan obligations.
The Singapore dollar dropped to 1.5190 against the U.S. dollar from 1.5120 a day earlier while the Thai baht was slightly higher at 34.95 against the greenback from 35.10 on Wednesday amid strong hopes Thailand's political crisis could be resolved without impacting the economy.
Analysts also feel a new Thai constitution will be approved as planned on Saturday.
"While the ringgit's fall, provided some form of spillover buying of the US dollar against the other regionals, domestic factors were at play for the baht," said Allison Seng, analyst with MMS in Singapore.
Dealers also said the Monetary Authority of Singapore (MAS), the de facto central bank of the city state, was rumored to be wanting to suppress the Singapore unit's strength for competitive reasons.