SINGAPORE, November 4: The Thai baht greeted Prime Minister Chavalit Yongchaiyudh's promise to resign with gusto on Tuesday, bringing cheer to most Southeast Asian currencies.The baht made a strong start after Chavalit's surprise announcement late on Monday, sparking predictions that the rally was overdone and would soon fizzle out. But official assurances that political changes would not hurt implementation of IMF-backed economic reforms and news of government spending cuts kept the baht well bid through the day.

It ended at its day high of 38.60/80 to the dollar onshore, more than five percent above late Monday levels of 40.90/41.00. The offshore rate was at 38.40/50 at 1040 GMT against 39.85/40.35 previously.``It seems the market is quite receptive to Chavalit's resignation,'' a US bank dealer in Singapore said.He said spirits were further lifted by announcements that the government would lop another 18 billion baht from 1997/98 spending, on top of a previous 100 billion baht cut. Thai stocks also rallied with the composite SET index adding 6.9 per cent to end at 478.33. But currency traders remained conservative about the baht's potential for more gains.

``I just can't see dollar/baht continuing to come off. I can't see the baht strengthening much further than 37.50/38.00,'' one said. And while Chavalit's decision to resign removed some of the market's immediate gloom, Thailand still faced a long, arduous road in rehabilitating its economy, analysts said.``A change of leadership obviously means something has to be done and decisions which have to be taken are not going to be popular,'' said Kim Teo, managing director of Nicholas-Applegate Capital Management Asia.

Teo said Southeast Asian markets were in for more pain in the next six to 12 months as Thailand and Indonesia moved to restructure their economies in line with IMF requirements.``The reaction we are seeing in the markets is more a technical bounce from an oversold position,'' he said. ``Currencies will remain weakish but certainly not at the near panic collapses we've seen,'' he added.

In Indonesia, the rupiah continued to rise on appreciation of the government's efforts to reform the economy in response to a massive IMF-led international aid package.Dealers said the scramble caused by tighter liquidity after three central banks intervened on Monday to buy the rupiah lifted forward rates in early trade.The value of concerted dollar sales for rupiah in Singapore on Monday by the Bank of Japan (BOJ), the Monetary Authority of Singapore (MAS) and Bank Indonesia was estimated at $ 300 to $ 500 million, senior Japanese traders said.Singapore dealers said Bank Indonesia had intervened again on Tuesday to sell dollars.

``They sold quite a few times even around the low of 3,210. I don't think it was really big amounts but they tried to cap (the dollar) above 3,270,'' the US bank dealer said.

The rupiah was at 3,260/70 to the dollar against its New York close at 3,205, sharply up from its Monday Asian close at 3,300/10.The Singapore dollar was at 1.5555/75 to the US dollar, off its highs of 1.5450 after active US dollar buying by local banks below the 1.5500 level.Dealers said there were rumours the dollar purchases were on behalf of the MAS, which was believed to be buying back dollars after Monday's intervention to support the rupiah. Malaysia's ringgit was at 3.2675/775 to the dollar against 3.2600/700 late on Monday.

Dealers said selling was expected after the ringgit's recent bounce, but they saw a further test of the 3.20 per dollar resistance. The Philippine peso ended higher at 34.84 to the dollar from a previous 35.14 close. The central bank offered dollars at 34.85/90 pesos but found no takers.Central bank governor Gabriel Singon said the policy-making Monetary Board would discuss by how much to lower the overnight lending rate at a regular meeting on Wednesday. The rate is at 16.125 percent. Even the Taiwan dollar and South Korean won perked up on Tuesday. The Taiwan dollar ended sharply up at T $ 30.730 against Monday's 10-year low of T $ 31.245.

Dealers said investors took profit on the US dollar gains after the central bank said on Monday the Taiwan dollar had lost too much value.On Tuesday, the central bank said the Taiwan dollar's recent depreciation made Taiwan remained ``extremely competitive'' against South Korea and Singapore in global export markets.The South Korean won ended at 961.00 against Monday's 969.90 close after the central bank poured an estimated $ 300 million into the market to support it.

Only the Hong Kong dollar slipped as traders unwound long positions on a belief that the premium of Hong Kong dollar interest rates over US rates would wane.Hong Kong Monetary Authority Chief Executive Joseph Yam said last week that domestic interest rates were likely to ease in the short term.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.