• ACI Russia

08/07/1998 16:52:59 EMERGING MARKETS FX-Asia, explosions shake rand

LONDON, Aug 7 (Reuters) - The rand slipped on Friday,

shaken by further Asian gloom and regional shock waves from

bomb blasts at U.S. embassies in Kenya and Tanzania, analysts


Most emerging Asian currencies eased in a lukewarm market

response to Japanese Prime Minister Keizo Obuchi's debut policy

speech to parliament and continuing fears of a Chinese currency

devaluation, while profit-taking and concerns about Russia

sapped recent Central European currency strength.

"In terms of wider uncertainty the bombs don't help the

rand," said David Simmonds, a senior emerging markets analyst

at Citibank in London.

"South Africa is extremely different from the rest of the

region but it's another complicating factor in terms of the

South African financial markets. Plus there's been another very

shaky performance in Asia."

The rand fell to test 6.3 to the dollar bid, and at 1400

GMT it was at 6.2875, nearly two percent lower than the 6.165

seen in midday London trading on Thursday.

The South African unit has lost around 25 percent of its

value against the dollar since late May, when it was hit by an

earlier wave of negative sentiment sweeping the world's

emerging markets.

Two bombs exploded within minutes of each other on Friday

morning outside the U.S. embassies in Nairobi and Dar es

Salaam, killing more than 30 people and injuring more than

1,000, and the death toll was expected to rise. No one has

claimed responsibility.

Kenya's foreign currency and stock markets closed after the

Nairobi blast, leaving the shilling virtually unchanged at 59

to the dollar.

Simmonds said the volume of foreign investment in Kenya and

Tanzania was already so low that the explosions had little

local market significance.

But, though South Africa was both geographically and

economically distant, some investors would fail to make such

distinctions and take fright over Africa as a whole.

In addition, analysts said the rand had recently taken its

lead more from Asia than emerging Europe.

The Asian mood was again subdued. Uninspiring news from

Japan, where Obuchi's plans to revive the economy failed to

impress investors, pushed the yen back over 145 to the dollar,

and there was continuing concern that the authorities in

Beijing and Hong Kong might be pressured into devaluing their


Analysts said the 9.1 percent devaluation of the Vietnamese

dong might have weighed slightly on neighbouring currencies

such as the baht and rupiah, because of regional competition

for export markets.

Most emerging Asian currencies softened slightly. The baht

was at 41.85 per dollar at 1400 GMT against 41.47 at midday on

Thursday, the rupiah eased to 12,700 from 12,600 and the

ringgit reached 4.2002 from 4.18. The won was fractionally

stronger at 1,324 from 1,328.

The Czech crown and the Polish zloty both lost steam amid

profit-taking and concern over renewed pressure on Russian

markets, and the forint also lost ground, analysts said.

"It's driven by what's happening in the emerging markets in

general, and the continuing fall in Russian asset prices hasn't

helped," said one analyst at a London bank, who asked not to be


"At times like this people do tend to take profits, and

that's what's happening with Poland, the Czech Republic and


With Russian dollar-denominated debt plumbing new record

lows, analysts said the central bank was having to dig into its

reserves to keep the rouble within its intervention corridor.

The zloty dropped sharply back from Thursday's record high

close of 9.10/9.07 percent above parity in Warsaw, where it

ended the day at 8.66/8.55 percent over. In London it was 3.44

bid against the dollar and 1.942 against the mark, from 3.4185

and 1.9325 respectively on Thursday.

The Czech crown weakened to 17.411 bid against the mark

from Thursday's 17.296, and analysts said concern about Czech

economic stagnation was coming to the fore.

The forint eased to 122.38 per mark from 121.79 on


FOREX MARKETS SNAPSHOT. The following is a snapshot of

emerging markets currency rates. Double-click on currency codes

for updated price quotes.


* Indonesian rupiah <IDR=> 12,700 per dollar bid vs 12,600

around midday in London on Thursday.

* Malaysian ringgit <MYR=> 4.2002 per dollar bid vs 4.18

* Thai baht <THB=TH> 41.85 per dollar bid vs 41.47

* Philippine peso <PHP=> 42.5 per dollar bid vs 42.6

* South Korean won <KRW=> at 1,324 per dollar vs 1,328

* Singapore dollar <SGD=> 1.749 per dollar versus 1.734

* Indian rupee <INR=> 42.57 per dollar vs 42.45.


* Russian rouble <RUB=> at 6.2885 per dollar bid vs 6.285 on


* Zloty 8.66/8.55 percent above target basket parity vs

9.10/9.07 at the close in Warsaw on Thursday.

* Mark/Czech crown <DEMCZK=> at 17.411 bid vs 17.296

* Slovak crown <DEMSKK=> 19.6 on mark vs 19.56

* Hungarian forint <DEMHUF=> 122.38 vs mark against 121.79

* Ukrainian hryvnia <UAH=> at 2.1423 per dollar vs 2.142

* Romanian leu <ROL=> at 8,705 per dollar vs 8,715


* Israeli shekel <ILS=> 3.7147 bid on dollar from Thursday's


* South African rand <ZAR=> at 6.2875 per dollar vs 6.165

* Kenyan shilling <KES=> at 59 vs 58.95


* Mexican peso <MXN=> at 9.015 per dollar vs 8.98

* Brazil's real <BRL=> at 1.1677 per dollar vs 1.1669

((Gill Tudor, London newsroom +44 171 542 6414, fax 583

7239, uk.emergingmarkets.news@reuters.com))

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