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.