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.