Singapore, Mar 3: Asian currencies drifted lower in slow trade late on Tuesday as uncertainty over Indonesia and a lack of fresh impetus elsewhere dampened interest.Indonesia remained in the spotlight as visiting US envoy Walter Mondale met president Suharto ahead of next week's elections.
Mondale told a news conference he had stressed the need for "full, demonstrable and vigorous" implementation of IMF reforms to Suharto.He also said there were no quick fixes for Indonesia's economic crisis, but added that Clinton understood the hardships the country was facing.Indonesia released data on Monday showing inflation jumped 12.76 per cent month-on-month in February after a 6.88 per cent rise in January. Food prices rose 16.07 per cent in February.
Spiralling food prices have triggered outbreaks of violence in parts of Indonesia and dealers said the market remained concerned about further unrest ahead of the elections, in which Suharto is almost certain to be re-elected to a seventh five-yearterm.
Suharto said on Sunday he would continue to implement IMF-sponsored economic reforms, but added that they were not helping end the country's troubles and more drastic steps were needed.The Indonesian rupiah barely twitched as traders retreated further into the wings due to continued uncertainty over a proposed currency board to strengthen and stabilise the rupiah.
US treasury secretary Robert Rubin on Monday urged Indonesia to stick to the IMF programme and reiterated that other issues had to be addressed before a currency board could be considered.Elsewhere, the Malaysian ringgit and Singapore dollar shed early gains as players covered their short dollar positions in the wake of the dollar's rebound above 126 yen.
The ringgit slipped back through the 3.60 per dollar level after failing to breach dollar demand near 3.55/57.Japanese finance ministry official Eisuke Sakakibara, on a visit to Kuala Lumpur, said Malaysia's fundamentals were very strong and the ringgit was still somewhatundervalued.
Sakakibara also said Asia depended too widely on the dollar and should use the yen more widely in regional trade.
It also came off against the Singapore dollar as the 0.4500 level remained a stubborn barrier.
But Thio Chin Loo, strategist at Banque Paribas in Singapore, said the cross was likely to head back towards 0.4800/0.5000 over the next three months as Singapore authorities were believed to be against an excessive strengthening of the domestic dollar.The Singapore dollar slithered through the 1.62 level to the US dollar as the psychological 1.60 base held.
"The 1.60 level is still quite important so people don't want to sell the (US) dollar there," a US bank dealer said.The Thai baht was sandwiched between corporate dollar demand and exporter sales, keeping it in a narrow range around the 43.00 per dollar level.Traders said the opposition's censure motion against prime minister Chuan Leekpai's government was unlikely to create too many ripples.
The president of parliament hashinted that the motion accusing the government of condoning corruption and of incompetence could be debated on March 18-19."Actually, I'm expecting a good laugh from the debate. What can the opposition attack this government about without raising questions at the same time about their own past handling of the problems," said a dealer at a Thai bank."But again, you cannot ignore it completely as anything can happen in Thai politics," he said.The Philippine peso perked up a bit amid stability in regional markets and a lack of corporate dollar demand.
The central bank cut its one-month lending rate to 17.93 per cent from 18.57 per cent. Central bank governor Gabriel Singson said banks' prime lending rates had gone down to 21 per cent this week.
Local businessmen in the southern Philippines closed their shops on Monday in protest over high lending rates, which they said were strangling business activities.But Singson said the central bank had no sanctions against commercial banks and businessmen should bepatient in coping with the crisis.The South Korean won erased early gains in the face of importer dollar demand and short-covering, but dealers said its decline would be cushioned by foreign fund flows to the stock market.
Foreign buying in local shares was estimated by stockbrokers at a net 133 billion won on Tuesday.The Hong Kong dollar was steady and forwards firmed slightly on position covering after recent falls, but dealers said the money market was likely to be in limbo ahead of the Indonesian elections and China's National People's Congress on Thursday.
Hong Kong Monetary Authority chief Joseph Yam, on a visit to Tokyo, told the Bank of Japan governor Yasuo Matsushita that a stable yen and Hong Kong dollar were important for Asia.
The Taiwan dollar finished just below the T$32.00 level as short-covering of the US dollar was countered by inflows to the stock market.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
