Asian currencies mixed late; bomb blast jolts rupiah

Asian currencies mixed late; bomb blast jolts rupiah

SINGAPORE (Dow Jones): Asian currencies were mixed late Tuesday after losing some of their earlier gains, as news of a bomb blast in Jakarta knocked the wind out of the Indonesian rupiah's sails.

A meeting among Indonesian President Abdurrahman Wahid and top political leaders in Yogyakarta Tuesday to try to ease political tensions provided some reprieve for the rupiah earlier in the day.

However, news of a bomb blast at the residence of the Philippine ambassador in Jakarta rattled investors, who were already nervous ahead of Indonesia's national assembly meeting next week, prompting them to sell down the rupiah, dealers said.

The dollar slipped to below 8,900 rupiah in early trading, but players attempted another stab at the Rp 9,000 mark following the bomb blast.

The Philippine peso was also roiled by the bomb attack in Jakarta, which Indonesian President Abdurrahman, more popularly called Gus Dur, confirmed was targeted at the Philippine government. The blast killed two people and left several others injured, including the Philippine ambassador to Indonesia.

In other markets, the Thai baht recovered slightly after falling to a fresh 10-month low Monday, while the Singapore dollar maintained its steady undertone, largely unperturbed by developments in the region.

The South Korean won was firmer, while the New Taiwan dollar was weaker.

After being eclipsed by the Thai baht's selloff over the past week, the rupiah returned to the limelight, as political anxieties intensify ahead of the People's Consultative Assembly, or MPR, session that begins Monday.

Earlier Tuesday, leaders of the major ruling coalition parties met with Gus Dur in central Java in an attempt to cool political tensions ahead of Monday's assembly session.

While the market initially reacted favorably to Vice-president Megawati Sukarnoputri's presence at the meeting, following recent reports of a widening rift between her and the president, the market remained uneasy, given her silence following the meeting, dealers said.

Nonetheless, a growing consensus has emerged among analysts following recent meetings with government and central bank officials in Jakarta that Gus Dur will likely survive the MPR session.

While acknowledging that Gus Dur will remain under political scrutiny, analysts are now toning down their bearish views on the rupiah.

Steve Brice, an analyst at Standard Chartered Bank, said he is growing "a little bit uneasy" over his bank's official forecast that the rupiah could weaken to Rp 9,800 to the dollar in the next few months.

While the rupiah could slide to Rp 9,300 to Rp 9,400 in the next few weeks, "any weakness beyond that would be temporary and limited," Brice said.

In late trade, the dollar was at Rp 8,953, down from Rp 8,965 late Monday and below Tuesday's intraday high at Rp 8,990. Before word of the bomb explosion made its rounds in the market, the dollar was hovering around Rp 8,920.

Meanwhile, market participants sold the Philippine peso after the Indonesian government linked the Jakarta bomb blast to the ongoing Muslim insurgency in southern Philippines, rather than political tensions in Indonesia, dealers said.

The dollar closed at 44.860 pesos on the Philippine Dealing System after hitting an intraday high of 44.900 pesos, up from Monday's close at 44.835 pesos.

In Taipei, intervention by the central bank, which accounted for about a third of the day's volume, failed to buoy the New Taiwan dollar, which ended at a new seven-month low. Concerns over the slumping local stock market have recently been weighing on the New Taiwan dollar. The U.S. dollar finished at NT$31.097, up slightly from Monday's close at NT$31.067, despite aggressive U.S. dollar selling by the central bank.

In contrast, an influx of foreign funds into the Seoul stock market and dollar-selling by local exporters propped up the South Korean won, dealers said. The dollar finished at 1,115.70 won, down from Monday's close at 1,116.70 won.

Against the Singapore dollar, the U.S. currency was at S$1.7330, unchanged from late Monday.