SE ASIAN CURRENCIES 'TO BE OUT OF W

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SE ASIAN CURRENCIES 'TO BE OUT OF WOODS ONLY BY 1999
2.9.97/BANGKOK POST/BUSINESS
P. PARAMESWARAN
SINGAPORE
AFP

BAHT TO STABILISE BY END-1999: NATWEST

Nearly all Southeast Asian currencies ended lower against the US
dollar yesterday, with one leading investment house predicting
that regional currency turmoil could come to an end only in 1999.

"The region would be out of the woods only in 1999," said a
research report by NatWest Markets, the investment banking arm of
Britain's National Westminster Bank, made available to AFP.

The report said a "degree of stability" could come for the
Singapore dollar, Malaysian ringgit and Indonesian rupiah as
early as the second half of 1998 while the Philippine peso and
the Thai baht could stabilise in mid-1999 and end-1999,
respectively.
     
An export recovery and ability to stem overheating by regional
economies were the key factors that could lead to the recovery,
NatWest Markets said.

Southeast Asia's foreign exchange rates tumbled after Thailand
effectively devalued the baht on July 2.

Since the beginning of July, the baht has lost about 38% of its
value against the US dollar, the rupiah was down by 21%, the
ringgit and the peso each fell nearly 16% and the Singapore
dollar by 5%.

In Singapore trading yesterday, the ringgit, the baht, the peso
and the Singapore dollar were all down against the greenback amid
cautious trading.

The rupiah was a shade higher against the greenback only because
it was cushioned by foreign exchange control measures announced
on Sunday by Indonesia to shoo away speculators, dealers said.

But analysts said Jakarta's move limiting foreign exchange
forward selling against the rupiah to US$5 million per
transaction was unlikely to thwart speculation.

"History has shown such controls apart from being perceived as
antiforeign investment cannot work and are unlikely to ward off
speculation," said Alison Seng, analyst with US investment house
Standard and Poor's MMS.

Forward selling means sales of currencies based on exchange rates
at the time of the transaction but with payment and delivery
scheduled for a specific future date.

Angus Armstrong, economist at Deutsche Morgan Grenfell, said:
"It's (Indonesia's foreign exchange control) unlikely to be the
panacea for the capital shortage in- Indonesia."

He said Jakarta's decision was basically a "defence measure
trying to isolate the onshore market to allow central banks to
reduce onshore interest rates."

Other countries in the region, including Malaysia, Thailand and
Singapore, had also imposed similar rules but failed to stop the
slide in their currencies, dealers and analysts said.

The rupiah rose sharply to 2,840 against the US dollar when Asian
currency trading opened yesterday but it fizzled out to end at
2,952.50, close to Friday's close of 2,957.

The Indonesian currency had plunged to a record low of 3,050 at
the end of last week.

The Malaysian ringgit ended lower at 2.9305 against the greenback
yesterday from Friday's close of 2.9000 while the Singapore unit
fell to 1.5145 -from 1.5115.

The Thai baht was a shade lower at 34.45 in offshore trades from
34.35 on Friday while the Philippine peso fell to 30.32 against
the greenback from 30.29.

"Basically, there seems to be some consolidation in the market
after the big falls seen last week," Armstrong said. Yesterday
was a public holiday in Malaysia, which marked 40 years of
independence on Sunday.

Seng of MMS said sentiment for regional currencies was still
"negative."  

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