Asian currencies mixed late as news of Wiranto weighs on rupiah
Asian currencies mixed late as news of Wiranto weighs on rupiah
SINGAPORE (Dow Jones): Asian currencies are mixed against the U.S. dollar in late Asian trade on Tuesday after a volatile session notable for a rise in the Singapore dollar, and rupiah weakness on speculation Indonesian Security Minister Gen. Wiranto will refuse to resign from the cabinet.
Asian currencies were generally weaker early on the back of a strong overnight performance by the dollar due to a sharp rebound on Wall Street. The dollar traded sideways for most of the day, but managed to post a new all-time high against the euro at US$0.9668 in early European trade, which suggests Asian currencies may come under renewed pressure Wednesday.
The Singapore dollar rose sharply during the afternoon session, with local banks, particularly Singapore's DBS Bank, emerging as notable buyers.
But market participants say there was no sign of the Monetary Authority of Singapore in the market. Traders believe the MAS bought Singapore dollars on Monday to smooth its decline against the U.S. dollar. The local currency had lost as much as 1.5 percent over the past five days.
Indeed, DBS argues in a report the MAS favors a strong Singapore dollar, and expects the currency will rise to S$1.58 by the end of the year.
The MAS wants a strong local currency to curb imported inflation and bolster Singapore's status as a financial and communications hub, DBS says.
Toward the end of local dealings, the U.S. currency was quoted against the Singapore dollar at S$1.6955, down from S$1.7013 previously.
The rupiah continues to be weighed down by political fears and uncertainty, particularly the future of Wiranto.
Indonesian President Abdurrahman Wahid at the World Economic Forum in Davos, Switzerland, demanded Monday the resignation of Wiranto after a government report blamed him and other top officers for a campaign of violence in East Timor last year.
Wiranto declined to comment on Wahid's demand, fueling speculation the general will dig in his heels.
This would add to tension between the administration and disgruntled elements of the military, and likely spark renewed talk of a possible military coup, says Syetarn Hansakul, the East Asia analyst with WestLB.
Fears of a standoff between Wahid and Wiranto when the president returns from official business overseas pushed the Jakarta Composite Stock Index down 3.1 percent to 616.86 - by far the largest fall on Tuesday on any regional bourse.
However, there should be some good news for the Indonesian economy and rupiah Wednesday. The Consultative Group for Indonesia, which comprises the main foreign donors to Indonesia, is expected to pledge around $4.5 billion in new loans to Jakarta to help it finance its budget.
The CGI is holding its annual meeting on Tuesday and Wednesday in Jakarta.
In last Asian trade, the dollar was quoted at Rp 7,450, up slightly from Rp 7,405 late Monday.
The South Korean won fell Tuesday as dollar-buying by the state-run Korea Development Bank and net selling of Korean stocks by foreign investors more than offset exporter buying. The Korea Composite Index of shares ended the day down 1.6 percent at 928.75. Authorities are trying to curb the recent rise of the won to maintain the price-competitiveness of Korean exporters.
By the end of domestic trading Monday in South Korea, the dollar was at 1,126.6 won from 1,123.2 won previously.
The Philippine peso closed marginally higher against the dollar, with the market largely sidelined ahead of an expected hike in U.S. interest rates at the Federal Reserve's Open Market Committee meeting Tuesday and Wednesday. On the spot market, the dollar was at 40.550 pesos from 40.572 pesos at Monday's close.
Elsewhere, the U.S. currency was at 37.505 Thai baht from 37.460 baht a day earlier, while the New Taiwan dollar edged higher to close trade in Taipei at NT$30.681 against the U.S. dollar from NT$30.699 a day earlier.