Asian currencies down as rupiah slides
Asian currencies down as rupiah slides
SINGAPORE (Dow Jones): As speculation of Indonesian capital controls fizzled out, a new political scandal in Indonesia threatened to erupt, knocking the wind out of the rupiah's sails late Tuesday.
The rupiah's slide - which represents a reversal from its recent fortunes - damped other regional currencies.
The Indonesian attorney general's office declared Tuesday that Bank Indonesia Governor Sjahril Sabirin's status has changed from that of a witness to a suspect in the Bank Bali scandal probe. The investigation centers around the transfer of funds last year out of Bank Bali to a company closely linked to the then-ruling Golkar Party.
Pressure for the central bank governor's resignation mounted, with the parliament even suggesting that Anwar Nasution, senior deputy governor, take over Sjahril's duties temporarily until a new governor is appointed. Sjahril, however, appears to be resisting calls for him to step down.
"The episode is seen by the market as a political maneuver to get rid of Sabirin," WestLB Research economist Syetarn Hansakul said.
Market rumors of a fallout between President Abdurrahman Wahid and Sabirin have recently been swirling in the market.
The rupiah fell as market participants showed their disapproval over the government's interference in the central bank's affairs and amid intensified concerns over mounting corruption allegations in the country.
"These are just some of the reasons why international investors are going to stay out of Indonesia," a dealer at a European bank said.
At 0830 GMT, the dollar rose to Rp 8,585 from Rp 8,475 late Monday.
The dollar faced resistance around Rp 8,600. If the dollar breaks Rp 8,600, it is set to face stiff resistance around Rp 8,750 in the short term, dealers said.
Speculation late last week that Indonesia might impose capital controls led to a rally in the rupiah. But such speculation was quashed when the idea of capital controls was shot down by the International Monetary Fund and the Indonesian president Monday.
Against the Singapore unit, the U.S. dollar rose above psychological resistance of S$1.7200 to S$1.7227 around 0910 GMT, up from S$1.7195 late Monday.
A dealer said investors were bailing out of their Singapore dollar positions in favor of other Group of Seven currencies and the euro.
Dollar buying by Thai importers when the U.S. currency breached resistance at 38.80 baht worsened the baht's losses, dealers said.
The dollar ended up at 38.895 baht late in Asian dealings, compared with 38.835 baht late Monday.
In Manila, banks and corporates covered short dollar positions, dragging the peso down to 42.375 pesos per dollar from 42.320 pesos at Monday's close.
Although rumors earlier in the day that one of the 21 hostages held by Muslim rebels had been killed proved to be false, the peso failed to regain its strength and fell as low as 42.40 pesos to the dollar.
Looking ahead, market participants will be awaiting the release of Japan's first-quarter gross domestic product data on Friday. If the data turn out better than market forecasts, that would strengthen the yen against the dollar and, in turn, provide a boost for Asian currency markets, analysts said.
Taiwan, Hong Kong and South Korean markets were closed Tuesday for national holidays.