SINGAPORE, February 23: Asian currencies slipped in early Monday trade after a meeting of G7 finance ministers failed to announce new moves to bolster the currencies.Analysts say foreign exchange markets were disappointed by the statements from the G7 ministers, even though little was really expected from the meeting.
"It was a non-event, we're back to square one with the regionals," said Kenneth Cheng, chief Asian analyst at MCM Asia Pacific.
The final G7 communique only urged countries in the region to pursue the structural reforms advocated by international financial institutions, while offering temporary financial assistance, if necessary, from the IMF.
"It was a bit disappointing that the G7 will not be doing anything," said a senior dealer with a European bank.Dealers say a return to dollar demand was almost inevitable, but they expected the regionals to hold within relatively tight ranges, with the focus moving back to domestic issues.
In Indonesia this has meant a focus on the decliningprospects for a currency board.
Weekend newspapers published comments attributed to unnamed senior officials seemingly designed to send a message that the currency board is no longer an immediate priority for the government.
But there has been no official statement on the subject, and markets are wary of concluding the idea has been formally dropped.
Dealers say the markets will be monitoring the Indonesian parliamentary sitting this week for news of the currency board's future.
Meanwhile, an IMF team is in Jakarta this week to review progress on its reform programme. They will report to the IMF's board in Washington which will decide whether to approve a further disbursement of funds from the $43-billion bailout package.
Elsewhere, fresh dollar demand pushed the Malaysian ringgit down to around 3.84 in morning trade from late Friday levels of close to 3.75.Over the weekend Malaysia's prime minister Mahathir Mohamad said he had reached a consensus with other Asian countries on a plan to conductregional trade in local currencies rather than through the US dollar. But Mahathir said the mechanics of the plan had still to be worked out.
Dollar strength against the yen and other majors was keeping the Singapore dollar under pressure.
The Singapore dollar was down about one cent in morning trade, with dealers saying the focus was shifting to the Singapore budget due out on Friday.In Thailand the market is awaiting the release of details from the latest IMF review.
An IMF team has completed a two-week review of the Thai government's compliance with its economic reform programme.
The team is expected to have reached agreement with the Thai government on a slightly restructured programme which takes into account changes in the economic environment since the original rescue package was first negotiated in mid-1997.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
