[IWAR] ASIA currencies plunge

From: Michael Wilson (MWILSON/0005514706at_private)
Date: Mon Jan 05 1998 - 10:19:34 PST

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                Asian currencies plunge, Thais seek new IMF bailout deal
          Copyright ) 1998 Nando.net
          Copyright ) 1998 Reuters
       SINGAPORE (January 5, 1998 10:48 a.m. EST http://www.nando.net) - Asian
       currencies fell to fresh lows Monday as the region's economic turmoil
       showed no signs of letting up and Thailand said it wanted to renegotiate
       the terms of a $17.2 billion bailout package with the IMF.
       A rare and ironic bright spot came from South Korea where U.S. financier
       George Soros, blamed by one Asian leader for sparking the region's
       currency crisis, said he was looking at the possibility of a "quite
       substantial" investment in Seoul.
       South Koreans lined up to turn over gold jewelry and knick-knacks as
       part of a nationwide campaign to help the country raise desperately
       needed dollars.
       "I believe it will help our country's economy," said Kang Seong-soon, a
       29-year-old Seoul housewife, who sold 150 grams of gold rings, bracelets
       and necklaces in the lobby of Daewoo Group's headquarters building in
       central Seoul.
       The Indonesian rupiah led the crash Monday, tumbling to a historic low
       of 6,700.00 on a sustained Indonesian corporate appetite for the dollar.
       The currency has lost more than 63 percent of its value against the
       dollar since the crisis began.
       The Philippine peso, Thai baht and Malaysian ringgit also sank to record
       lows, while many regional stock markets suffered losses.
       Dealers said there had been no let-up in investor and corporate demand
       for dollars across Asia with regional currencies being dragged along in
       the wake of dollar/yen.
       "This reflects continued investor pessimism in the region as economic
       slowdowns, political uncertainty and possible social unrest weigh on the
       regional currencies," said Thio Chin Loo, strategist at Banque Paribas
       in Singapore.
       "There is no silver lining in sight. It has been one bad news after
       another like a knock-on effect," said a dealer with a major European
       "With (U.S.) Treasuries and Wall Street rising and Japanese markets
       falling it's hard to see anything other than a firmer dollar from here,"
       said one trader at a leading European bank in Singapore.
       Thai Prime Minister Chuan Leekpai said economic problems were likely to
       prevent the country meeting a key condition in the bailout package
       arranged with the International Monetary Fund.
       The condition required Thailand to produce a cash surplus equivalent to
       1 percent of its gross domestic product in the 1997/98 fiscal year
       The IMF arranged the multilateral rescue package for Thailand last
       August because of spiraling debt, poor asset quality and a plunging
       Thailand was the first country in the current Asian economic crisis to
       go to the IMF. South Korea and Indonesia followed suit soon after.
       "The premise on which the terms were based have changed. And we will ask
       if the IMF has a plan to review it," Chuan said. "We have cut spending
       substantially but shortfalls in revenue will be as high as 100 billion
       baht ($2.0 billion), which makes it important to adjust the plan," he
       Taiwan Foreign Minister Jason Hu on Monday offered to help Asian
       neighbors fight the currency crisis that has sharply weakened economic
       development in the region.
       "The financial crisis in Southeast Asia is a regional problem, like a
       contagious flu," Hu told parliament.
       George Soros told a news conference at the end of a visit to South Korea
       he was sending a team of experts to Seoul by the end of the month.
       "We have practically no investments currently, but they could expand
       quite substantially," Soros said.
       Asked about local media reports that the funds he manages would invest
       up to $1 billion in South Korea, Soros said: "That report is premature."
       Soros met President-elect Kim Dae-jung and his team of economic advisers
       Sunday for talks on the Korean economic crisis. Soros said his visit to
       Seoul was at the invitation of Kim.
       "My meeting with DJ (Kim Dae-jung) and his team has encouraged me to
       send a team of advisers to study investment possibilities because I was
       impressed with their understanding of the magnitude of the problem,"
       Soros said.
       The role of Soros as sage in Korea contrasts with the vilification he
       received a few months ago by some Asian leaders, notably Malaysian Prime
       Minister Mahathir Mohamad who accused him of deliberately destabilizing
       regional currencies.
       Soros denied the charge.
       The won was trading at around 1,780 to the dollar on Monday against
       1997's close of 1,695. It was 842 to the dollar a year ago.
       Soros said reform of Korean chaebol, or conglomerates, and a
       restructuring of the financial system were vital for investment.
       By EDWARD DAVIES, Reuters

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