Thai baht fall depresses SE Asian currencies
Thai baht fall depresses SE Asian currencies
SINGAPORE (Reuter): Southeast Asian currencies slid once more
yesterday as the Thai baht fell to record lows, spurring fresh
buying of the dollar across the board.
The baht hit a new record low of 34.10 to the dollar onshore
in the afternoon after heavy commercial demand for dollars and
nagging concerns about Thailand's economic and political outlook
pushed the baht through the key 33 level in early trade.
"When the baht breached the 33 level, everyone lost confidence
and wanted to unwind the baht as quickly as possible," a Bangkok
dealer said.
The baht was quoted at 34.10/40 to the dollar at 0855 GMT
against 33.13/32 five hours earlier. Offshore baht was at
33.65/80 against 32.70/32.80.
Concern that Thailand's shrinking foreign reserves would be
affected by big forward swap contracts carried by the central
bank also hurt sentiment for the baht, dealers said.
The central bank said on Thursday it had $23.4 billion in
forward swap contracts that are due over the next 12 months, of
which $8.6 billion are onshore and $14.8 billion offshore.
The forward contracts were taken to defend the baht during
massive speculative attacks in May.
"With 33 being broken, the sky's the limit. It's in uncharted
territory," the head of Asian currencies at a European bank in
Singapore said.
He said the baht looked set to hit 35 to the dollar and the
central bank was unlikely to intervene to stop the slide.
In Indonesia, the rupiah recovered from its lows but remained
weak as players covered short dollar positions ahead of the
weekend and local companies sought to hedge their positions.
"The funds are buying the dollar again after liquidating their
positions above the 2,900 level," the Singapore dealer said.
Sentiment was also depressed by Standard and Poor's
announcement on Thursday that it had revised the ratings outlook
on Indonesian banks to negative from stable, he added.
Reports of a run on deposits at one of Indonesia's banks were
also affecting the market, he said.
Spot rupiah was at 2,700/20 after falling to a low of 2,755
against 2,670/90 late on Thursday.
A Japanese bank dealer in Jakarta said the rupiah could
strengthen through the 2,700 level again as the outlook for
liquidity remained tight.
"Liquidity is still the main concern. Operators are also
preparing for Monday because the previous central bank forward
intervention will mature," the dealer said.
The Malaysian ringgit surrendered early gains and fell sharply
on spillover from the rupiah and baht, though thin volumes and
wide spreads continued to exaggerate activity.
The ringgit was at 2.7685/715 to the dollar after reaching a
high of 2.7430 earlier, against 2.7650/700 late on Thursday.
The Singapore dollar slid back through the 1.50 to the U.S.
dollar level and was quoted at 1.5040/50 at 0855 GMT.
"But the pace will be slower as the market is looking more
favorably at the Singapore dollar than the other regionals," a
dealer said, citing strong Singapore export figures announced on
Wednesday and an upward revision of its 1997 growth forecast.
The Philippine peso ended firmer on inflows of arbitrage money
and as exporters and other companies converted foreign currency
deposits to pesos following recent central bank moves to tighten
liquidity.
The peso finished at 29.85 to the dollar against Thursday's
close of 29.885.
In Taiwan, the central bank's prolonged defense of the
T$28.727 level in the face of offshore speculative pressure
finally dampened demand for U.S. dollars.
The Taiwan dollar ended virtually unchanged at T$28.725.