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.