Asian monies under pressure because of rupiah's slide<\/p>\n
SINGAPORE (Dow Jones): The Indonesian rupiah continued to
\nweaken Friday on a series of misstatements by senior
\npolicymakers, putting pressure on currencies in other Asian
\nmarkets.<\/p>\n
In late trading Friday, the U.S. dollar briefly surged past
\nthe level of Rp 8,700, its highest point since Sept. 27, after
\nthe governor of the central bank said he would intervene to
\nsupport the rupiah only \"if it will be effective.\"<\/p>\n
The statement by Sjahril Sabirin was widely interpreted as a
\nsign of weakness by traders already inclined to sell the currency
\nfollowing a statement on Thursday by Indonesia's top economic
\nofficial, Kwik Kian Gie, who said he couldn't recommend his
\ncountry to foreign investors.<\/p>\n
The rupiah closed in Jakarta at Rp 8,380 against the American
\ngreenback after the central bank intervened the market before the
\nclose of the trading.<\/p>\n
The Thai baht and the Philippine peso were dragged lower by
\nthe rupiah. Regional currencies had already been weakened by
\nexpectations of an impending rise in interest rates in the U.S.,
\nwhere the Federal Open Market Committee is widely expected to
\nhike its key federal funds rate by 50 basis points when it meets
\nTuesday.<\/p>\n
The Singapore dollar, meanwhile, was higher in late trading
\nFriday following reports that the Monetary Authority of Singapore
\nhad intervened to defend the currency on Thursday. The Thai baht,
\nwhile lower, also gained support from reports of central bank
\nintervention the previous day.<\/p>\n
Around 0845 GMT, the U.S. dollar was at Rp 8,485, up from Rp
\n8,375 late Thursday but off its intraday peak.<\/p>\n
Against the baht, the U.S. dollar was at 38.845 baht, up from
\n38.815 baht late Thursday.<\/p>\n
The dollar also rose to 41.475 pesos from 41.430 pesos. The
\npeso continued to suffer from the Muslim insurgency in the
\nsouthern province of Mindanao, where rebels are holding foreign
\nhostages, said Philip Wee, treasury economist at Standard
\nChartered Bank.<\/p>\n
Among southeast Asian currencies, only the Singapore dollar
\ngained ground following Thursday's intervention by the Monetary
\nAuthority of Singapore. The U.S. dollar fell to S$1.7243 from
\nThursday's S$1.7265.<\/p>\n
Traders hesitated to bid the U.S. dollar above the level of
\nS$1.7300 for fear of provoking a further round of intervention by
\nthe MAS, analysts said.<\/p>\n
\"If selling intensifies to the levels we have seen, I'm sure
\nthey will step back in,\" said Philip Wee, treasury economist at
\nStandard Chartered Bank.<\/p>\n
But across southeast Asia, currencies are likely to weaken
\nfurther on expectations that U.S. rates will continue to rise
\neven after next week's Fed meeting. And a volatile U.S. stock
\nmarket is adding to the uncertainty, prompting investors to
\nwithdraw funds from relatively risky emerging markets, analysts
\nsaid.<\/p>\n
Analysts said the supply of U.S. dollars had all but dried up
\nin Indonesia, with exporters withholding the currency from the
\nmarket in the expectation that the rupiah will fall even further.<\/p>\n
Patrick Bennett, currency strategist at Warburg Dillon Read,
\nsaid the market is waiting for a stronger stance from the
\nIndonesian central bank.<\/p>\n
\"They don't want to come in just to provide liquidity to the
\nmarket,\" Bennett said. \"Nothing that's being said is dissuading
\nanyone from holding on to these dollars.\" The central bank, he
\nsaid, \"Needs to come out and say something stronger.\"<\/p>\n
Analysts said the rupiah would continue to weaken as the
\nmarket starts to wonder how long Kwik would stay in his job. Some
\nobservers said the dollar could quickly jump to Rp 9,000 or
\nbeyond.<\/p>\n
\"The markets will remain very cautious in Indonesia,\" said
\nDavid Simmonds, currency strategist at Citibank in Singapore.
\n\"There clearly will continue to be talk and speculation about a
\nfurther cabinet reshuffle.\"<\/p>\n
Indonesian President Abdurrahman Wahid, however, said he had
\nno plans to replace Kwik, calming the markets somewhat. He blamed
\nthe weakening currency on the anniversary of 1998 ethnic riots,
\nsaying local businesses were holding on to their U.S. dollars for
\nfear of unrest.<\/p>\n
In South Korea, the U.S. dollar rose to 1,114.5 won in late
\ntrading, up from 1,109.10 won on Wednesday. Thursday was a
\nholiday in Korea. Friday's closing level was the weakest for the
\nwon since April 17, when it touched 1,115.30 won to the U.S.
\ndollar.<\/p>\n
Analysts said, however, that the won was unusual among Asian
\ncurrencies in that it would gain against the dollar if
\nauthorities tighten monetary policy in response to surging
\neconomic growth.<\/p>\n
The Taiwan dollar got a boost from a stock market rally. The
\nU.S. dollar ended trading at NT30.739, down from Thursday's close
\nat NT30.752. The central bank also supported the currency,
\ndealers said.<\/p>",
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