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SCMP Reporter

Regional currency markets remained volatile yesterday, but some market players retreated to the sidelines amid a lack of clear direction and fears of renewed central bank intervention.

 The Malaysian ringgit went on a roller-coaster ride, weakening to M$2.57 to the US dollar in New York trading overnight on Monday before recouping some lost ground during a bumpy day of trading yesterday in Singapore.

 The Philippine peso weakened slightly amid very low turnover, falling by just under one peso to the US dollar to close at a weighted average of 29.67.

 The Indonesian rupiah, Thai baht and Singapore dollar all regained some of Monday's heavy losses.

 'This is the quietest day I've had in a week or two, but it's still been busy,' one dealer said.

 Andy Tan, general manager at MMS International in Singapore, said: 'Mostly we are seeing thin, cautious, jittery trade. There is a lack of clear trading direction.'  Acting Malaysian Prime Minister Anwar Ibrahim yesterday spoke out in support of the ringgit and lashed out at 'concerted' attacks on regional currencies and reiterated Malaysia's readiness to combat 'subversive' plays.

 On Monday, Malaysia's central bank failed to support the currency for much of the day, sparking concern yesterday that it might be waiting to take steps to punish speculators after allowing the ringgit to weaken further.

 Mr Anwar's tough comments helped the ringgit recover to M$2.53 at one stage yesterday, only to weaken later to M$2.557.

 'The central bank will continue to monitor from time to time [the ringgit's movement],' Mr Anwar said. 'I am confident it will reverse the trend.'  Analysts took this to mean Malaysia would be allowing the ringgit some breathing space but that Bank Negara had not thrown in the towel.

 The Philippines central bank intervened modestly yesterday for a second day running, more to give the market a sense of direction and some liquidity rather than to prop up the peso.

 Volume has been exceptionally low for the past two days, hitting just US$46 million yesterday, with many banks and companies on the sidelines waiting for the central bank to signal of where it expects the currency to settle.

 Dealers said Bangko Sentral ng Pilipinas sold about US$15 million of US dollars between P29.80 to the dollar and P29.40, offering blocks of about US$500,000.

 'It's having a good effect on the market, it's calming the market down,' said Leslie Limsico, first vice-president at Philippine Commercial International Bank.

 Before the central bank intervened, the peso/dollar market had almost ground to a halt, with banks unwilling to relinquish their dollars.

 Governor Gabriel Singson said: 'We are sending strong monetary signals to let the market realise that, while the peso will be allowed to float more flexibly, we also want to see orderly market conditions.

 'We expect the foreign exchange market to clamp down and stabilise in the next couple of days.'  The rupiah dipped yesterday to 2,455 against the US dollar from the overnight close of 2,450 but later recovered to 2,445.

 Indonesia's central bank said it would continue its policy of gradually depreciating the rupiah. Last Friday's decision to widen the trading band against the US dollar from 8 per cent to 12 per cent was a pre-emptive move to allow the currency greater flexibility and allow it to gradually depreciate.

  'By widening the band, we learn how to have a floating rate policy,' C. Harinowo, monetary management director at Bank Indonesia, said. 'At the end of the day, maybe we are moving towards that kind of floating rate environment, but we haven't any indication now of when that should be.'  Rerngchai Marakanond, Thailand's central bank governor, yesterday said he thought the baht would stabilise further over the next few days. He said volatility in regional markers had affected baht trading onshore, but he did not expect the baht to depreciate further.

 Deputy governor Chaiyawat Wibulswasdi said: 'We think the baht has weakened enough, or even a bit too much, given the current state of the economy.'  Analysts are predicting the baht will remain weak over the next few months, given pessimism about the health of the economy, especially the finance sector.



Currencies creep back amid continued market volatility