08/11/1998 12:39:40 EMERGING MARKETS FX- Pressure spreads worldwide
By Mike Dolan
LONDON, Aug 11 (Reuters) - Emerging market currencies
weakened sharply across the globe on Tuesday, pounded by a lack
of investor confidence in high-yield assets, a plethora of
holiday-season market rumours and woefully scarce liquidity.
sent prices plummetting, analysis of underlying asset values or
economic trends has been temporarily ditched.
"With price moves of this sort of magnitude people are
simply having to cut and run at this point and it's having
ghastly implications for liquidity," said David Simmonds,
emerging markets economist at Citibank.
"The market is so stressful at the moment that it's
difficult to see any turnaround in sentiment near term."
Reports Indonesia had defaulted on its sovereign debt
repayments sent an additional shiver around trading rooms on
Indonesia's Chief Economic Minister Ginandjar Kartasasmita
denied the reports and said the country had already begun
rescheduling its debt. Any hiatus in payments was already known,
he said, and was related to the rescheduling .
However, the Japanese yen's slide to new eight-year lows
kept concerns about a Chinese or Hong Kong devaluation on the
boil. This was despite another strong denial from the People's
Bank of China that such a move was on the agenda.
Sliding Asian stock markets and weaker currencies across the
board fed into eastern Europe, where Russian markets nosedived
and the rouble wobbled below its daily cental bank target band.
Russian stocks fell almost 10 percent.
Even the recently more insulated central European markets
felt the pinch, with Polish and Hungarian stocks lower and the
usually oblivious zloty beating a retreat from recent highs.
The Hungarian forint fell to record lows against its target
parity rate against a basket of currencies as local stocks
dropped more than seven percent.
The battered South African rand also got caught in the
global slipstream and South American currencies probed lower
after intense downward pressure emerged late Monday.
"The Japanese policy vacuum and the default-devaluation
scares sweeping places like Russia and China are seeing prices
fall to levels which in normal conditions would cry out for a
bounce," said Claudio Demolli, analyst at ABN Amro.
"But we can't see where the trigger for a bounce is going to
come from this time. It may be that it has to become a crisis of
worldwide proportions that will require some global response."
FOREX MARKETS SNAPSHOT. The following is a snapshot of
emerging markets currency rates. Double-click on currency codes
for updated price quotes.
* ASIA <AFX=>
* Chinese yuan <CNY=> at 8.2799 vs 8.2799 on Monday. New
Taiwanese dollar <TWD=> 34.81 vs 34.38
* Indonesian rupiah <IDR=> 13,100 vs 13,400 late Monday
* Malaysian ringgit <MYR=> 4.245 per dollar bid vs 4.1042
* Thai baht <THB=TH> at 42.4 per dollar vs 40.80
* Philippine peso <PHP=> 43.60 per dollar vs 42.00
* South Korean won <KRW=> at 1,333 per dollar vs 1,254
* Indian rupee <INR=> 42.85 per dollar vs 42.45
* EUROPE <EUROPEFX=>
* Russian rouble <RUB=> at 6.2990 per dollar bid vs 6.2740 on
* Zloty 7.74 percent above target basket parity vs 8.55 at on
* Mark/Czech crown <DEMCZK=> at 17.866 bid vs 17.503
* Slovak crown <DEMSKK=> 4.24 pct below target basket vs 4.00
* Ukrainian hryvnia <UAH=> at 2.1446 er dollar vs 2.1315
* Romanian leu <ROL=> at 8,710 per dollar vs 8,725
* AFRICA <AFRICAFX=> & MIDEAST <MEFX=>
* Israeli shekel <ILS=> 3.6770 bid on dollar from Monday's
* South African rand <ZAR=> at 6.37 per dollar vs 6.2400
* Kenyan shilling <KES=> at 58.90 vs 59.00
* LATIN AMERICA <LATAMFX=>
* Mexican peso <MXN=> at 9.24 per dollar vs 8.89
* Brazil's real <BRL=> at 1.1687 per dollar vs 1.1630
((London newsroom +44 171 542 6762, fax 583 7239,