• ACI Russia

08/10/1998 15:38:32 EMERGING MARKETS FX- Asian clouds depress all

LONDON, Aug 10 (Reuters) - Emerging market currencies

worldwide continued to trade under the cloud of Asian

uncertainty on Monday, with concern about the stability of the

Chinese and Taiwanese units prompting local central bank action.

Dealers in Shanghai said the People's Bank of China bought

the yuan to hold it at 8.2800 per dollar. It was at least the

third such operation this month alone, they said.

Taiwan's central bank, meantime, issued a one-page statement

reserving the right to intervene to defend the Taiwan dollar

against what it saw as an unjustified depreciation of the local

currency to seven-week lows.

"You have a wave of negative sentiment fueled first and

foremost by developments in Asia and concerns about the (yuan)

renminbi as well as the Hong Kong peg," said Charles Blitzer,

chief economist, emerging markets at brokers Donaldson, Lufkin

and Jenrette.

"I think those concerns are somewhat misplaced," Blitzer

said. "The Chinese reiterated yesterday that they will not be

devaluing the renminbi and I think that is credible unless we

begin to see the yen in real freefall and breach 160."

The dollar hovered just below its 1998 high at 146.75 yen on


The latest wave of jitters in regional Asian financial

markets centre on the risk that a weakening Japanese yen may

eventually force China and Hong Kong to match last year's series

of sharp currency devaluations elsewhere in Asia.

A Chinese devaluation could, in turn, trigger another round

of devaluations across the economically depressed region,

analysts said.

The risk of another shock of that proportion is keeping

foreign investors shy of local securities and continues to

undermine confidence in high-yielding emerging markets in


The gloom in Asia combined with concerns about weakening

U.S. stocks to pile pressure on Latin American debt and currency

markets on Monday and has added to the woes in already fragile

Russian and South Africian currencies.

In a note to clients about the South African rand on Monday,

analysts at Bank Julius Baer recommended steering clear of the

currency for now despite talk of a bounce back from recent sharp


"Although the rand is now cheap on purchasing power

measures, recovery will not be easy this time," economist Paul

MacNamara wrote.

MacNamara cited investors' current aversion to high-risk

assets and a perceived inability of South African authorities to

maintain high interest rates in the face of more vocal domestic

calls for higher growth.

"The markets have now decisively called South Africa's bluff

on its ability to sustain high interest rates," he said.

FOREX MARKETS SNAPSHOT. The following is a snapshot of

emerging markets currency rates. Double-click on currency codes

for updated price quotes.


* Chinese yuan <CNY=> at 8.2799 vs 8.2801 on Friday. New taiwan

dollar <TWD=> 34.65 vs 34.60.

* Indonesian rupiah <IDR=> 13,000 vs 12,700 on Friday.

* Malaysian ringgit <MYR=> 4.23 per dollar bid vs 4.2055

* Thai baht <THB=TH> at 41.75 per dollar vs 41.85

* Philippine peso <PHP=> 44.05 per dollar vs 43.25

* South Korean won <KRW=> at 1,324 per dollar vs 1,325

* Singapore dollar <SGD=> 1.747 per dollar versus 1.7540

* Indian rupee <INR=> 42.55 per dollar vs 42.57


* Russian rouble <RUB=> at 6.2910 per dollar bid vs 6.2880 on


* Zloty 8.55 percent above target basket parity vs 8.66/8.55 at

on Friday.

* Mark/Czech crown <DEMCZK=> at 17.617 bid vs 17.39

* Slovak crown <DEMSKK=> 19.597 on mark vs 19.576

* Ukrainian hryvnia <UAH=> at 2.1447 er dollar vs 2.1423

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


* Israeli shekel <ILS=> 3.6680 bid on dollar from Friday's


* South African rand <ZAR=> at 6.2830 per dollar vs 6.2700

* Kenyan shilling <KES=> at 58.95 vs 59.00


* Mexican peso <MXN=> at 9.135 per dollar vs 9.016

* Brazil's real <BRL=> at 1.1688 per dollar vs 1.1679

((London newsroom +44 171 542 6762, fax 583 7239,


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