Se Asia Currencies Under Siege

Southeast Asian currencies remained under siege on Wednesday with the Thai baht and Philippine peso ploughing to record lows.

Dealers said regional currencies were being moved more by individual domestic considerations as players were not lumping them together as much as in previous weeks, even though sentiment for the region remained bearish.

The baht dived to a low of 36.20 to the dollar, less than 24 hours after falling through the long-awaited 35 level, as companies sought dollars to hedge positions and exporters held back from selling the dollar, expecting it to go yet higher.

Dealers said the market was weighed down by domestic political worries, with Standard & Poors (S&P) reduction of Thailands foreign currency rating to A- from A fuelling further anxiety about Bangkoks debts.

 

S&P said the downgrade reflected substantial losses in the financial sector and the decrease in Thailands external financial flexibility.

The baht was quoted at 36.30/50 to the dollar onshore at 0430 GMT against 35.15/35.25 late on Tuesday. It was at 35.15/35 offshore against 34.45/65.

Theres no top for dollar/baht. I think it should propel to 37 next, a European bank dealer in Singapore.

The Philippine peso hit a new low of 31.70 to the dollar after closing at 30.89 on Tuesday.

Manila traders said a dollar shortage and the central banks failure to intervene contributed to the pesos decline. They said the central bank continued to place its dollar offers well above the market rate.

The Malaysian ringgit fell to 2.9450/500 to the dollar against 2.9390/440 late on Tuesday.

Dealers said the market was still awaiting July trade data. They were expected last week and the delay was increasing speculation of a deficit widening, they said.

Players were also watching Kuala Lumpur stocks, isolated in their weakness on Wednesday as the rest of Asia rebounded on the back of Wall Streets highest point gain in a single day.

The Singapore dollar fell off a high of 1.5150 to the U.S. dollar on selling by local banks and U.S. funds.

Dealers said it was likely to trade in a 1.5150/1.5250 range for the time being.

The European bank dealer said the Singapore dollar had touched an overnight high of 1.5135 on heavy U.S. dollar sales by the Brunei government near the 1.5230/40 region.

They were selling because the Brunei dollar is pegged to the Singapore dollar and they want a strong currency, she said.

On Friday, the Singapore dollar rebounded from a low of 1.5375 on talk the Brunei Investment Agency was selling large amounts of U.S. dollars for the Singapore dollar and ringgit.

The Indonesian rupiah traded choppily as players eyed the governments monthly economic cabinet meeting for fresh leads.

It remained below the 3,000 level and was near its day lows at 3,0250/35 against 3,020/30 late on Tuesday.

The Taiwan dollar held firm as demand for the U.S. dollar subsided with the stock markets recovery and market fears of challenging the central banks resolve to defend the currency.

The Taiwan dollar was at T$28.615/617 against Tuesdays T$28.615 close. Taiwans weighted share index rose 2.70 percent to end at 9,502.73.

The South Korean won edged up to 904.50 against Tuesdays close at 905.30 with players wary of the central bank after it intervened repeatedly to sell dollars in spot and forward markets on Tuesday.