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.