Asian currencies fall late; focus on firmer rupiah
Asian currencies fall late; focus on firmer rupiah
SINGAPORE (Dow Jones): Most Asian currencies slumped late
Monday as the Japanese yen continued its downward spiral and as
worries over President Joseph Estrada's impeachment trial sent
the Philippine peso to a new record low.
The New Taiwan dollar, which earlier succumbed to the yen's
decline to a fresh 18-month low against the dollar, closed
unchanged amid caution ahead of a ruling on the controversial
scrapping of the island's fourth nuclear power plant by the
cabinet, dealers said.
But it was the Indonesian currency, the sole gainer in the
region, which grabbed the market's attention as confusion over
the central bank's regulations on offshore rupiah trading
announced late in the day triggered panic selling in dollars,
dealers said.
The Indonesian rupiah staged one of its strongest rebounds in
recent weeks. The currency was slowly strengthening ahead of the
central bank's briefing late in the day, as participants unwound
their long dollar positions in anticipation of stricter
regulations on offshore rupiah trading.
But the steady pace of dollar-selling turned frenetic as
alarmed market participants misread the central bank's rules on
rupiah trading as capital controls, after a news agency reported
that Bank Indonesia planned to ban rupiah transfers to offshore
banks, dealers said.
Later in the day, Bank Indonesia clarified that it wouldn't
stop onshore banks transferring rupiah funds into dollars, but
that it was simply restating a long-standing law which states
banks can't move rupiah offshore without changing it into a
foreign currency. The rule is aimed at stopping offshore
speculators getting hold of rupiah.
Restatement of the rule on rupiah transfers is aimed at
backing up a new regulation, reported earlier Monday, cutting
forward lending limits of rupiah to offshore borrowers from
onshore banks to $3 million from $5 million.
The rupiah's rally proved to be short-lived once participants
realized that the central bank wasn't moving to implement capital
controls.
After falling sharply earlier to around Rp 9,400, the dollar
regained its ground to trade around Rp 9,470 at 0855 GMT. The
dollar remained lower than last Friday's level of around Rp
9,600.
The Singapore dollar, which was sliding on the yen's weakness
earlier in the day, recouped some of its losses as the rupiah
advanced, dealers said.
The U.S. dollar was at S$1.7356, up from S$1.7342 late Friday,
but down from its intraday high of S$1.7377.
The Thai baht also found partial respite from the rupiah's
gains, after floundering earlier in the day on the yen's
weakness, dealers said.
The dollar was at 43.455 baht, up from 43.415 baht at the
Asian close Friday, but below its intraday high of around 43.600
baht.
In Asian trading, the yen hit an 18-month low of Y119.37
against the dollar amid pessimism over Japan's economy and
Japanese authorities signaling their tolerance for a further
slide in the yen.
The Philippine peso closed at a new record low of 52.400 pesos
against the dollar, amid concerns over President Joseph Estrada's
impeachment trial and a further reduction in the central bank's
overnight rates, dealers said. The dollar closed at 51.590 pesos
Friday.
Elsewhere, the South Korean won ended at its lowest closing
level since Nov. 19, 1998, thanks to the yen's losses.
The dollar finished at 1,285.8 won, up from Friday's close of
1,281.1 won.
Against the New Taiwan dollar, the U.S. currency ended
unchanged at NT$32.699.