This is a story of how the region's currency traders humbled Manila's Bangko Sentral nine days after bringing the Bank of Thailand to its knees. It is a cautionary tale of monetary authorities mouthing courageous denials of devaluation plans, and unbelieving speculators putting their dollars where their doubts were. There were winners laughing all the way to the trading terminals, and losers counting devalued pesos and baht as they contemplated the prospect of pricier gasoline, groceries and cars. Read on and find out how Asia must come to grips with that incontrovertible fact and what prospects the currency markets now hold for the region's restive economies. Thai economic woes pressure Asian currencies, including the peso.
Central banks raise interest rates and sell dollars in defense.
As it had done in the face of previous speculative attacks, which had intensified since Thailand's banking and property crisis broke in April, the Bangko Sentral had raised overnight interest rates in late June and dumped greenbacks on buyers hoping to depress the peso rate. Manila's interbank currency market. But the basic strength of our economic fundamentals, as well as timely responses by the Bangko Sentral, quickly calmed the market. Not for long. Flushed with victory, speculators swung their howitzers at the peso and the ringgit.