Thai baht plunges to new low, brings down other currencies
Thai baht plunges to new low, brings down other currencies
BANGKOK (Agencies): Thailand's battered currency defied central bank intervention yesterday, plunging past a crucial psychological barrier to a record low, as other Asian units followed suit, dealers said.
The baht, which has lost more than 35 percent of its value since its shock flotation in July, slid to the 40 to the dollar mark as the country faced unprecedented political and economic turmoil.
"It's finally hit the 40 level after creeping slowly towards it for weeks," a currency dealer said. "There is nothing left to hold it -- the economy looks hopeless and there is too much political wrangling."
The unit ended the day at 39.98 to 40 baht to the greenback after crashing through a series of record lows as the country's worst economic crisis in more than five decades became ever more keenly felt.
The unit had closed Wednesday at 39.40-45, but some analysts in Hong Kong predicted it could fall as low as 45-50 baht to the U.S. dollar.
Bank of Thailand assistant governor Kiattisak Meecharoen told a press conference the central bank had intervened, but did not say when the action began.
"The baht is overshooting from the recent stock and currency market turbulence, and after closely monitoring the situation the BoT has intervened to support the baht," Kiattisak said.
Analysts said continued economic woes as well as political wrangling and brinkmanship, while not providing a pretext for a massive drop in the currency, did not help prop it up either.
A $17.2 billion International Monetary Fund (IMF) rescue package arranged in August has failed to stem the flight of capital due to concerns about the government's willingness and ability to implement the terms of the deal.
"Any signs of confusion at the political level are clearly going to just increase anxieties from creditors' perspectives, which will have a knock-on effect on the foreign exchange market," an analyst said.
The Hong Kong dollar was steady around HK$7.7295/25 but the forwards jumped as traders again took a view on the peg in the light of a fresh slide in the Hang Seng.
The three-month forward rose to 1,300 against Wednesday's close of 1,000 while six-months was up at 2,500 against 1,800.
The Indonesian rupiah was steady with dealers saying trading was effectively paralyzed ahead of the formal announcement of Indonesia's IMF package.
The Malaysian ringgit ended little changed at 3.4150/4250. Traders said the fact that both Kuala Lumpur and Singapore were closed for the Deepavali holiday meant spreads were wide and actual volume done was minimal.
The Taiwan dollar also hit a 10-year low Thursday against the U.S. greenback and is set to break the 31 mark, dealers said. The local unit closed Thursday at 30.944, the lowest level since November 1987, on the back of weaker Southeast Asian currencies, dealers said.
The central bank of South Korea, another ailing Asian "Tiger" economy, intervened on the currency market to support the sliding won, which ended at 960 to the dollar.
The Philippine currency, the peso -- also cut free from its peg amid the regional financial crisis -- meanwhile closed 0.60 percent weaker at 35.03 pesos against the U.S. dollar from 34.82 pesos the previous day, dealers said.
Trading ranged from 34.75 pesos to 35.20 to the greenback on a turnover of $163.7 million, the Bankers' Association of the Philippines said.