Asian currencies higher, rupiah gains ground on reform hopes
Asian currencies higher, rupiah gains ground on reform hopes
SINGAPORE (Dow Jones): Asian currencies were higher across the
board Friday with the rupiah gaining ground on optimism that
Indonesia will be able to meet a weekend deadline for economic
reforms sought by the International Monetary Fund.
Indonesia missed the IMF's original March 31 deadline,
triggering a wholesale rupiah selloff earlier this week. This led
the rupiah to fall to its lowest level in six months as the U.S.
dollar climbed through the Rp 7,800 level.
Friday's recovery saw the dollar briefly fall below 7,640
rupiah in intraday trading before edging back up at the close.
Toward the end of Asian trading Friday, the dollar was quoted
at Rp 7,663, down from Rp 7,785 in thin, offshore trading
Thursday. There was no local trading Thursday as Indonesian
markets were closed for a holiday.
"Some market participants are more optimistic that Indonesia
will not spoil its second chance and will meet the reform
deadline," said Syetarn Hansakul, regional treasury economist at
West LB in Singapore.
"There was a feeling that the rupiah might have been oversold
during the previous three days amid the IMF uncertainty," one
dealer said.
Despite Friday's recovery, the market probably will retain a
negative bias against the rupiah in the near term because of
general uncertainty about the prospects for reform in Indonesia,
dealers said.
In addition to local factors, Asian currencies benefited from
a general sense that the U.S dollar had been bid up too high
across the region during the week, a dealer at a foreign bank
said.
In northern Asia, the South Korean won was driven higher on a
buying surge in local stocks. Seoul's Kospi index rose 4.1% on
the day.
At the close of local trading, the U.S. dollar was quoted
against the won at 1,107.3 won, down from 1,112.0 won late
Thursday.
The rally in the Nasdaq overnight helped spark interest in
South Korean technology stocks, dealers said.
Next week, market participants probably will focus on the
April 13 parliamentary elections, West LB's Hansakul said.
"We're unlikely to see the won break new ground ahead of the
elections," she said, as the market waits to see whether the
ruling party can hold on to control.
The Thai baht edged up, moving higher in tandem with the
stronger rupiah and on exporters' sale of dollars, dealers said.
Exporters were looking to have an ample supply of baht on hand
with Thai markets closed for two days next week for the New Year
holidays, a dealer at a Thai bank said.
"There was position-squaring before the weekend by both
exporters and importers," he said.
At the close of local trading, the U.S. dollar was quoted at
37.985 baht, down from 38.135 baht late Thursday.
The Philippine peso firmed up, hitting its highest level in
more than a week in intraday trading. Investors have been
shunning the currency in recent sessions amid growing discontent
with President Estrada's ability to lead the country.
The U.S. dollar was quoted at 41.105 pesos at the close of
trading, down from 41.120 pesos late Thursday. Several dealers
said the peso was simply swept higher along with other Asian
currencies and that market sentiment will continue to be bearish
on the peso over the near term.
The Singapore dollar also finished higher in featureless
trading. The U.S. currency ended Asian trading at S$1.7125, down
from S$1.7156 the previous day. The pair stayed within a narrow
range, finishing the day about where it started.
The New Taiwan dollar finished a touch higher. The U.S. dollar
was quoted at NT$30.444, down from NT$30.469 Thursday.
The government reported that foreign exchange reserves fell by
about $600 million in March when the central bank was forced to
defend the local currency during the runup to the presidential
election. It was the first foreign reserve decline in 21 months.