Rupiah leads Asian currencies plunge

And in yet another sign that the month-old regional crisis was far from over, Fiji devalued its dollar by 20 per cent to an official level of $0.5201.

Fijian authorities said the strength of the domestic dollar, which is pegged against a basket of currencies including the Australian and New Zealand dollars, the yen, US dollar and sterling, was hurting the trade and tourism industry.

The rupiah’s slide through the 10,000 per dollar level in early trade shook the fragile poise of other Asian currencies.

"Despite Suharto’s pledge to comply with the IMF package, the market doesn’t perceive the rupiah well. There are a lot of small banks and companies which have more debts," said a European bank dealer in Singapore.

"Corporates need dollars to service their US dollar-denominated interest payments. Every time there’s a rally in the rupiah, Indonesian corporates sell into it, so why buy?" asked the head of trading at a major European bank in Singapore.

Talk that Jakarta banks were facing a shortage of dollars and were offering to settle transactions in rupiah with Singapore banks added to the rupiah’s woes, dealers said.

Some also cited uncertainty over president Suharto’s running mate in the March presidential polls as a factor. The head of the ruling Golkar party said Suharto was ready to be nominated for a seventh term in office in the March elections.

The Malaysian ringgit slipped to 4.2000/100 to the dollar from 4.1300/600 late on Monday, but dealers said its decline was contained by buying of the ringgit/Singapore dollar cross and high domestic interest rates.

The benchmark three-month Kuala Lumpur Interbank Offered Rate crossed the key 10-per cent mark on Tuesday. It was fixed at 10.04 per cent against 9.57 per cent on Monday. Malaysian finance minister Anwar Ibrahim said interest rates might rise further as Malaysia tries to rein in credit growth.

Anwar also said Kuala Lumpur was willing to take tough new austerity measures to protect the economy and the privatisation process would have to be reviewed.

Across the border, the Singapore dollar slid to 1.7570/10 per US dollar from 1.7470/90 late on Monday. "In time, dollar/Sing should go back to 1.80 and higher," the European bank dealer said. The Thai baht dipped to 53.05/25 per dollar onshore against 52.85/53.15 late on Monday. The offshore rate was at 51.90/52.40 against 52.00/52.50.

Dealers said its descent was more muted as players held out for the outcome of talks on the review of IMF-sponsored reforms tied to Thailand’s $17.2-billion loan package.

The Philippine peso outshone its neighbours due to perceived intervention by the central bank and expected inflows of $500 million from Swiss banks due to repatriate the wealth of former dictator Ferdinand Marcos.

Manila traders said the central bank was believed to be intervening through two foreign banks with which it has swap accords. The peso was at 40.91/97 against Monday’s 41.10 close.

The Taiwan dollar was hit by weakness in the rupiah and yen, but traders said its fall would be cushioned by demand for cash ahead of the Chinese New Year holiday at the end of the month.

The Hong Kong dollar was steady at 7.7375/95 to the US dollar, but forwards edged up amid weakness in other currencies. Down under, the Australian dollar slipped to US$ 0.6626/31 against 0.6655/60 late on Monday in reaction to the rupiah’s slide.