Troubled SE Asian currencies under attack again

Troubled SE Asian currencies under attack again

SINGAPORE (Reuter): Beleaguered Southeast Asian currencies
were sold heavily once again yesterday in another dramatic day of
foreign exchange trading, traders said.

"I'm tied up at the moment, I'm tired at the moment and I
don't really know what to do at the moment. Otherwise, I'm fine,"
an exotic currencies trader at a European bank in Singapore said
on Monday.

After Southeast Asia had seen two de facto devaluations -- of
the Thai baht and the Philippine peso -- within a couple of
weeks, currency speculators turned their attention to the
Malaysian ringgit and were rewarded immediately.

The ringgit closed in Kuala Lumpur on Friday at 2.5042/5052 to
the dollar. But after the effective devaluations elsewhere in the
region, traders decided to test the resolve of Bank Negara,
Malaysia's central bank.

The ringgit swiftly collapsed to a 16-month low of 2.5500/10.
Dealers said Bank Negara was believed to have put up token
resistance to the selling by intervening. Central bank officials
were unavailable for comment.

The ringgit recovered a little and at 0900 GMT was quoted at
2.5400/5410 to the dollar. "With Malaysia's good fundamentals,
the ringgit will in time be fairly valued," said Sani Hamid,
market analyst at research house MMS International.

As the ringgit became the latest currency to head lower, the
Philippine peso started its first day of trading after the de
facto devaluation on Friday when the central bank -- Banko
Sentral ng Pilipinas (BSP) -- allowed it to trade at a wider
range against the U.S. dollar.

During the afternoon, BSP was buying pesos at 29 to the U.S.
dollar, an indication that this was a level it wanted to see. The
peso had earlier dropped to a new low of 29.75 to the dollar.

Before the BSP action, the peso was trading at around 26.40
pesos -- effectively making the new level a decline of some 10
percent.

BSP Governor Gabriel Singson also disclosed that the
Philippines' gross international reserves had dropped to some
US$9.7 billion as of Monday. This compares with a level of around
US$12 billion in March.

Thailand's baht also suffered. The baht was the first of the
Southeast Asian currencies to slide and effective devalue, thus
prompting the domino effect still working its way through the
region.

At one stage the baht was traded at 30.60 to the dollar but at
0900 GMT was quoted at just below 30 baht compared with Friday
quotes of around 29.00. The Thai central bank said it regarded a
level of around 30 to the dollar as appropriate.

The Indonesian rupiah had a roller coaster day falling to a
low of 2469.0 to the dollar compared with Friday's finish of
around 2439.0 before recovering to be quoted at 0915 GMT at
2450.0.

On Friday, the central bank, Bank Indonesia, announced a
widening of the dollar-rupiah's trading band to 12 percent from
eight percent.

Kobus van der Waht, regional treasury economist at Standard
Chartered Bank in Singapore told Reuters Financial Television
that Friday's surprise move had given a signal.

"Bank Indonesia doesn't want to be part, or doesn't want to be
in the same trap as happened in Thailand and to an extent in the
Philippines," he said.