Stronger bourses help currencies to claw higher

PUBLISHED : Wednesday, 04 February, 1998, 12:00am
UPDATED : Wednesday, 04 February, 1998, 12:00am

Most Asian currencies clawed their way higher yesterday, continuing their improved performance boosted by the recent strength of the regional stock markets.

The Thai baht led the way gaining more than 5 per cent to break back through the 50 to the US dollar mark.

Analysts said Bangkok's removal of a protective two-tier foreign exchange system last week has been seen by many as a sign that stability may be finally returning.

Sentiment was also boosted by growing hope that an International Monetary Fund review of Thailand's aid package may result in more flexible terms.

'People are hoping for something special,'said market intelligence analyst Ishak Ismail, of Independent Economic Analysis.

The Malaysian ringgit shot through the key M$4 barrier yesterday, hitting a high of M$3.97 to the US dollar in early trade fuelled by the domestic stock market's dramatic 23.14 per cent rise.

Foreign funds eager to get back into the soaring stock market had to first buy the local currency, which fostered the ringgit's rise.

The Singapore dollar also firmed but failed to sustain a rise above S$1.70 to the US dollar.

Standard & Poor's MMS International general manager Andy Tan said: 'Regional sentiment [yesterday] is a lot better than last week.

'But the general feeling is that if there is a recovery it will be a slow and gradual process.' Thai Prime Minister Chuan Leekpai said the stronger baht still did not reflect Thailand's economic fundamentals which he said were set to improve, and warned against complacency.

Analysts say there was still a risk that should current stronger stock market sentiments turn, some recent currency gains could be left vulnerable.

The recent surge in the South Korea won fizzled after its recent rally, seemingly unimpressed by European rating agency Fitch IBCA's move to upgrade South Korean debt.

The Indonesia rupiah also struggled as players continued to fret over potential social unrest amid spiralling inflation, rising unemployment and upcoming presidential elections.

The Philippine peso ended higher at 40.50 to the dollar despite late selling caused by US dollar demand.