SINGAPORE, March 16: Asian currencies were off their highs but relatively firm on Monday as traders turned towards Thailand's brightening prospects after an event-filled weekend in Indonesia failed to stir fresh interest.Talk of strong buying of the Thai baht, Malaysian ringgit and Singapore dollar by large US investment houses and even the Brunei government's investment arm kept the US dollar on soft ground in Asia, dealers said.
But it perked up against regional currencies after rising above 129.00 yen in late trade on fresh concerns about Japan's banking system when a Liberal Democratic Party official said 10 Japanese banks may have negative net worth.
Dealers said trading volumes had improved and Asian currencies were benefiting from a belief that the Indonesian sickness might not be as contagious as once thought.
"A differentiation between countries and currencies is becoming more evident and market players are more willing to buy Asian currencies on the back of positive developmentsdomestically while keeping in mind the poorer state of health in others," Banque Paribas said in a daily report.
But dealers remained reluctant to predict a trend.
"Everything is quite delicate. At the current level, prices could go either way," a US bank dealer in Singapore said.
In Indonesia, the rupiah dipped through the 10,000 per dollar level in late trade, but flows were limited as uncertainty about a currency board proposal continued to dog the market.
Asian Development Bank president Mitsuo Sato said Indonesia's continuing economic plans could lead to a second crisis in the region, and he saw little chance of the country being allowed flexibility in adopting IMF-sponsored reforms.
President Suharto's new cabinet, which includes his eldest daughter Siti Hardianti Rukmana as social welfare minister and close associate Mohammad "Bob" Hasan as trade minister, left the market unimpressed as most of the appointments had been anticipated. Japanese prime minister Ryutaro Hashimoto's weekend visit toJakarta also yielded little that was new. Hashimoto said he was convinced Suharto would take "courageous decisions" to resolve Indonesia's crisis.
Japanese media on Monday quoted Indonesian vice minister Jusuf Habibie as saying his country may be able to implement 48 of 50 reform provisions in its agreement with the International Monetary Fund. The Thai baht remained the darling of Asian currencies, briefly rising above the 40.00 per dollar level, and prompting central bank governor Chaiyawat Wibulswasdi to hint at the prospect of lower interest rates.
"The trend of a more stable baht could give room for lower interest rates," he said, noting positive media reports about prime minister Chuan Leekpai's US visit had boosted market sentiment.
Chuan, who met president Bill Clinton and other officials, secured promises of $1.7 billion in American trade financing and aid.
"On top of that, there have been strong expectations that international rating agencies could lift the country from junk bond status," aBangkok dealer said.
Dealers said the baht was grappling with some dollar demand just below the 40.00 level, but a clear breach of that area would put it on track for 37.00/38.00 -- levels not seen since last November.
Elsewhere, the Singapore dollar came off after breaching the 1.60 level to the US dollar on early buying by US investment houses.
Dealers said the Singapore dollar reached a peak of 1.5960 in London and New York markets on Friday on the back of US investment house buying.
The Malaysian ringgit backed off its highs after encountering dollar bids near the 3.70 level, but dealers said it showed potential to head higher amid talk that Brunei had sold $1.5-$2.0 billion last week.
Deputy prime minister Anwar Ibrahim said Malaysia would have to lower its 1998 growth forecast of four to five per cent due to the regional financial crisis.
Malaysia's Consumer Price Index rose 4.4 per cent in February from the same month in 1997.
The Philippine peso's rise was thwarted as large banks andcompanies started buying the dollar near its low of 39.29 pesos.
In north Asia, the South Korean won was the star performer, surging through 1,500 to the dollar amid ample dollar liquidity and slower than usual demand.
Active foreign investment in the shorter end of the country's bond market and a positive outlook on Seoul stocks also boosted the won.
Traders said there was a belief the government would prefer a stronger won before it began negotiations with the IMF on lowering interest rate targets. The Hong Kong dollar was steady while forwards and interest rates softened as major banks unloaded funds amid calm in regional currency markets.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
