Asian currencies down on yen slide and Indonesian politics
Asian currencies down on yen slide and Indonesian politics
SINGAPORE (Dow Jones): A surge in the U.S. dollar to a four-
and-a-half month high against the yen pushed Asian currencies
lower late Wednesday.
The U.S. currency rose above Y109.00 for the first time since
mid-September on concerns that Japan's burgeoning fiscal deficits
haven't stimulated domestic demand sufficiently to ensure a self-
sustaining recovery. An expected interest rate rise in the U.S.
later Wednesday also helped the dollar.
Fitch IBCA, an international ratings agency, says there would
have to be concern about Japan's credit outlook if large budget
deficits persist. Fitch downgraded Japan's long-term foreign
currency rating in September 1998.
Concerns over the political climate in Indonesia are also
weighing on regional currencies, particularly the Indonesian
rupiah and Singapore dollar, as a showdown looms between
Indonesian President Abdurrahman Wahid and Coordinating Minister
for Political Affairs and Security General Wiranto.
Wahid, who is in Europe for meetings with political and
business leaders, Tuesday again called for Wiranto to quit his
Cabinet post after a government report blamed him and other top
officers for atrocities in East Timor last year.
Wiranto, who attended a Cabinet meeting Wednesday in Jakarta,
continues to ignore calls for his resignation, which some
observers interpret as a signal he will defy Wahid. This would
add to tension between the administration and disgruntled
elements of the military, and has sparked talk of a possible
military coup, although Wahid dismissed such speculation as
"hogwash."
However, the rupiah's failure to rally on confirmation the
Consultative Group for Indonesia will help fund Jakarta's fiscal
year 2000-01 budget deficit with up to US$4.7 billion in new
loans shows the level of concern in financial markets. The CGI
comprises Indonesia's main international donors.
In late Asian trade, the dollar was quoted at Rp 7,520, up
slightly from Rp 7,450 late Tuesday, while Jakarta stocks again
lost ground, defying another strong night on Wall Street. The
Jakarta Composite late in the day was down 2.1 percent at 603.69,
extending its losses since Monday's close to more than 5 percent.
The Singapore dollar was weaker against its U.S. counterpart
in line with the decline in the rupiah.
But most traders and analysts believe the Singapore currency
is a value buy against the U.S. dollar above S$1.7000 as the
Monetary Authority of Singapore in the second half of 2000 may
look to tighten monetary policy through a stronger exchange rate.
Many are forecasting a move under S$1.6000 by the year end.
The U.S. currency was quoted against the Singapore dollar at
S$1.6985 late in the day, up from S$1.6955 at Tuesday's close.
The South Korean won suffered heavy losses Wednesday in line
with the weaker yen.
Buying of dollars by the state-run Korea Development Bank
pushed the won to a brief intraday low of 1,134 won. Late in the
day the dollar was at 1,130.5 won, up from 1,126.6 won at
Tuesday's close.
Authorities in recent sessions have used yen weakness to help
push the won lower, and thereby keep South Korean export prices
competitive with those of Japan.
Elsewhere, the U.S. currency was at 37.560 Thai baht, up from
37.505 baht previously. In Taipei, the dollar was higher against
the New Taiwan dollar, quoted at NT$30.767 from NT$30.699 a day
earlier. The Philippine peso late Wednesday was at 40.640 pesos
against the U.S. dollar from 40.572 pesos at Tuesday's close.