Thai Baht and RP peso hit record lows against dollar
Thai Baht and RP peso hit record lows against dollar
SINGAPORE (AFP): Southeast Asian currencies led by the Thai baht and Philippine peso dived to record lows against the dollar yesterday as the region's monetary crisis began its third month with the bottom far from view.
The central Bank of Thailand was seen intervening in the market when the baht touched a new low of 37 to the dollar in domestic trade after credit risk analysts Standard and Poor's downgraded Thailand's long-term foreign currency rating.
The baht clawed back to the 36 level mid-afternoon but analysts said they believed this may not hold for long.
"Sentiment is still bearish so you can see the 37.00 level tested again," said Maya Pinto, regional economist with British research house I.D.E.A. in Singapore. "They don't have much ammunition in terms of foreign reserves."
Offshore the baht stood a shade below 35.00 mid-afternoon, after closing at 34.45 Tuesday.
The contagion effect was in evidence again as the Indonesian rupiah and Malaysian ringgit also plunged to new lows before pulling back.
The rupiah touched a record low of 3,060 before the central bank of Indonesia was rumored to be stepping in, bringing the unit up to around 3,000 mid-afternoon, up from Tuesday's close of 3,030. The ringgit hit a low of 2. 9735 but was hovering around the 2.9500 level mid-afternoon.
"It's all because of the baht," said Alison Seng, an economist with Standard and Poor's research house MMS in Singapore. "The dollar-baht has rallied tremendously since yesterday when local corporates panicked."
"The market will still take it up again because there is genuine demand, from the corporates especially," she added.
The Philippine peso plunged to a new low of 31.83 to the dollar, from Tuesday's close of 30.688, on expectations that the Monetary Board would relax bank liquidity reserve requirements which have driven up interest rates.
Philippine economic planning chief Cielito Habito conceded that the country was "very unlikely" to meet its target of seven percent growth in gross national product this year because of high interest rates which have soared beyond 30 percent, bleeding businesses dry.
The confirmation of a slowdown was expected to put even further pressure on the peso.
Amid the regional bedlam, the Singapore dollar was an oasis of calm, trading firmer at 1.5145 to the greenback mid-afternoon, compared to Tuesday's close of 1.5227.
The baht was already falling fast on political worries even before Standard and Poor's downgraded Thailand's long-term foreign currency debt rating to "A-" from "A," affecting an estimated US$3.3 billion in obligations.
"A further downgrade could occur if continued weak political leadership impedes restoration of political credibility through implementation of financial sector reforms and adherence to the IMF stabilization program," the rating agency said.
The agency also lowered Thailand's long-term local currency rating from "AA" to "AA minus," it said.
"It's just more bad news," said David Cohen, senior economist with MMS in Singapore.
Even before the ratings downgrade, the Thai market was already on edge ahead of a key parliamentary debate Thursday on a draft constitution, with coup rumors denied by the army top brass.