Asian currencies climb, with strong rupiah leading the way
Asian currencies climb, with strong rupiah leading the way
SINGAPORE (Dow Jones): Asian currencies are stronger against
the U.S. dollar in late trading Monday with a surprisingly strong
Indonesian rupiah leading the way, following the weekend election
of reformist Amien Rais as the speaker of the People's
Consultative Assembly, the country's highest legislative body.
The election of Rais - the high-profile leader of the National
Mandate Party - is seen as another positive sign that Indonesia's
presidential election process will go smoothly. The market
believes Megawati Sukarnoputri, who leads the Indonesian
Democratic Party of Struggle, will be elected president Oct. 20.
The ruling Golkar Party's Akbar Tanjung is still favored to be
elected speaker of the lower house of parliament.
At 0745 GMT, the U.S. dollar was trading at Rp 7,717, well
down from Rp 7,970 in late Asian trading Friday.
"It's been a pleasant surprise to see the presidential
election proceed as smoothly as the market appears to have been
discounting, given the recent tension over the new security
bill," said Ryan Padgett, treasurer at Bank Brussels Lambert in
Singapore. The Indonesian government suspended Sept. 23 the
introduction of a new security bill that would have given the
military sweeping powers to quell civic unrest.
"You would've thought the various parties would all have some
fairly robust lobbying on the streets of Jakarta by now," Padgett
said.
If the presidential elections continue to be peaceful through
October, he expects the U.S. dollar to test Rp 6,000.
"It is going to be a tenuous process, though; it's more likely
that we'll see some jitters before all is said and done," he
added.
The rupiah's rise against the U.S. dollar managed to
overshadow the release Monday of the Bank of Japan's quarterly
Tankan survey of business sentiment.
The Tankan's closely-watched business condition diffusion
index for large manufacturers - which calculates the percentages
of companies saying business conditions are good minus those
saying they are bad - improved to minus-22 from minus-37 in the
last survey in June.
Traders said the survey results were within expectations, and
proved modestly bullish for the U.S. dollar against the yen. At
0745 GMT, the U.S. dollar was trading at Y105.87, up from Y104.96
in late trading Friday.
Also, the U.S. Federal Open Market Committee meeting Tuesday
has left the market cautious with participants wondering if an
interest rate hike is forthcoming.
"The market is beginning to think that there is going to be
wave of tightening on a global basis," said Padgett.
"The market expects the Fed to tighten tomorrow or in
November, it shouldn't have a huge impact on regional as long as
the U.S. economy continues to grow strongly and pull in Asian
exports."
Padgett said trade surplus currencies - either in emerging or
developed economies - should flourish in coming months.
"We're looking for regional to continue strengthening. The
market has become much less sensitive to interest rate
differentials - as long as U.S. imports hold up, it will help
Asian currencies," he said.
A currency strategist at a Singapore bank said central banks
in Asia wouldn't react adversely to moderate strengthening of
domestic currencies, given the already substantial weakening of
regional versus the U.S. dollar.
At 0745 GMT, the U.S. dollar was trading at S$1.6910,
significantly down from S$1.6987 late Friday. Traders said the
trade-weighted Singapore dollar has been strengthening in line
with other regional currencies, especially as the Thai baht and
Indonesian rupiah improve.
The U.S. dollar was also trading at 40.35 baht, down from
40.575 baht in late trading Friday. On the Philippine dealing
system, 40.56 pesos, down from 40.73 pesos Friday.
In Taiwan, the U.S. dollar was trading at NT$31.783, up from
NT$31.73 late Friday. Against the South Korean won, the U.S.
dollar was at 1214.1 won, down from 1215.5 won.
South Korea's Financial Supervisory Commission said Monday it
will push forward the completion of a planned 20 trillion won
bond-market stabilization fund to mid-October. The government has
so far set up 11 trillion won in funds and had originally planned
to set up the remaining 9 trillion won of the fund by the end of
October.