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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
institution.
"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
(October-September).
The IMF arranged the multilateral rescue package for Thailand last
August because of spiraling debt, poor asset quality and a plunging
currency.
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
said.
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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