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.