Asia monies mostly weaker as rupiah sours sentiment
Asia monies mostly weaker as rupiah sours sentiment
HONG KONG (Dow Jones): Sour sentiment around the Indonesian rupiah continued to unsettle currencies throughout the region Thursday, although investors took a break from selling the rupiah in afternoon trade.
Along with the rupiah, the Philippine peso, Thai baht and Singapore dollar fell in the session as the markets continued to express disappointment with Indonesian President Abdurrahman Wahid's appointments to the new governing cabinet late Wednesday.
The South Korean won ended slightly higher, while the New Taiwan dollar was little changed.
Dealers now await further comments from Indonesian Vice President Megawati Sukarnoputri to judge her mood and willingness to cooperate with Wahid's government after his cabinet appointments largely sidelined her own Indonesian Democratic Party of Struggle, or PDI-P.
She has already indicated that she won't break a recent deal with the president on sharing power.
However, analysts warned of dire consequences if the markets get an inkling of a deeper dissatisfaction from her that could hinder efforts to work with the ruling party toward solving Indonesia's economic problems.
Unless there's some indication that government policy will change constructively "investors aren't going to bite," said Rebecca Patterson, a JP Morgan currency strategist.
She said her firm still maintains an aggressive target for the U.S. dollar nearing Rp 10,000, without significant political and economic improvement.
The U.S. unit was trading at Rp 8,400 late Thursday, up from Rp 8,380 at the close of Asian trading Wednesday and after the cabinet appointments were announced. Traders said for now the dollar looks range-bound between Rp 8,250 and just over Rp 8,500.
Short covering and rumors about Megawati's intentions" pushed the U.S. dollar to Rp 8,540 in morning trade, said a dealer with a U.S. bank. The dealer noted many traders had worried earlier whether the vice president might resign in protest over the cabinet postings. When those rumors proved false the pair dipped back below Rp 8,500.
He said the level remains key, however, and a close above it in the next session could open up a quick move to Rp 8,900.
The rupiah's problems began in earnest late Wednesday as markets became upset with everything from the appointment of Prijadi Praptosuhardjo as the new Indonesian finance minister, and Rizal Ramli as chief economics minister, to an apparently mocking quip from Wahid to explain Megawati's absence from the cabinet announcement. He said she was taking a bath.
And that continued to spell trouble for the baht, peso, and Singapore dollar.
The dollar was at 40.93 baht, up from 40.650 baht late Wednesday, entirely in sympathy with the action in the Indonesian currency, dealers said.
In the Philippines, the peso traded at 44.96 to the U.S. dollar, up from Wednesday close of 44.915 pesos. Dealers reported cautious trade amid an ongoing central bank investigation of several banks suspected of violating foreign exchange trading rules.
In Singapore, the U.S. unit traded up to S$1.7203, from S$1.7140 late Wednesday.
In North Asia, the South Korean won ended Asian trade at 1,113.60, from 1,114.60 won.
In Taiwan, the U.S. dollar is quoted at NT$31.064, down from NT$31.07.
Patterson said as the rupiah's troubles pull down neighboring currencies in Southeast Asia, that could cause a resumption of a divergence between them and the currencies of Northeast Asia as those are pulled up by the recent renewed strength of the yen.
Late in the day the U.S. dollar was trading at about Y107.06, up slightly from Y107.03 late Wednesday in New York.