Asian currencies mixed on talks about credit rating revision

Asian currencies mixed on talks about credit rating revision

SINGAPORE (Dow Jones): Asian currencies were mixed late Friday, as talk of revisions to credit ratings had divergent effects on the Thai baht and the South Korean won, dealers said.

In Indonesia, an outburst by Coordinating Economics Minister Kwik Gian Gie against the International Monetary Fund had little effect on the rupiah, which firmed.

The Thai baht took a beating after a local newspaper reported Friday that Moody's Investors Service Inc. had warned that Thailand's sovereign debt was too high for the country to qualify for a ratings upgrade.

The report fueled short-covering in dollar positions, although a denial later by a Finance Ministry official and dollar sales by exporters around 39.010-39.015 baht capped the U.S. currency's ascent, dealers said.

In contrast, market rumors late in the day that international credit rating agencies would soon upgrade South Korea's sovereign ratings reversed the won's slide, dealers said.

The dollar finished at 1,114.40 won, down from Thursday's close of 1,115.30 won. In the morning session, the dollar had climbed to an intraday high of 1,117.50.

Indonesia's Kwik, visibly angry when he spoke to reporters, lashed out Friday at the IMF for making what he termed a "baseless statement" about inconsistencies within the government on economic reform.

According to local media reports, IMF Indonesia representative John Dodsworth said this week that the government should continue to implement its reform program consistently and avoid voicing personal opinions that undermine government unity.

The rupiah remained steady despite Kwik's rebuke to the IMF, although it kept market participants on edge.

"His outrage only confirms what we have long known that the working relationship between the IMF and Indonesia has been less than smooth," which may threaten to delay IMF's loan disbursement to Indonesia, said West LB Research economist Syetarn Hansakul.

The dollar closed Rp 8,605, down from Rp 8,620 late Thursday. The U.S. currency had traded within a narrow range of Rp 8,590 to Rp 8,636 during the day. Dealers said there was profit-taking by speculative players after the dollar was bought up to almost Rp 8,700 Thursday.

Concerns persist over President Wahid Abdurrahman's fragile administration, especially ahead of the People's Consultative Assembly's meeting in August at which some legislators have suggested there could be attempts to unseat the president.

"There's a lot of fear before the August meeting," a chief foreign exchange dealer at a European bank said. "People don't want to get stuck in Indonesia in case something happens, while a lot of corporates are buying dollars before it (the dollar) gets higher."

Nonetheless, the dollar will continue to face strong resistance around Rp 8,700, although many dealers expect the U.S. currency to eventually test Rp 8,800 in the short term.

The U.S. dollar rose to S$1.7257 from S$1.7200 late Thursday in Asia.

Dealers said short-covering by U.S. funds and strong commercial buying had propelled the U.S. currency higher.

But the U.S. currency, which hit an intraday high of S$1.7266 Friday, is expected to continue facing resistance around S$1.7280 in the short term, they said.

Japan's gross domestic product expanded by 2.4% in the January-March quarter, below the consensus projection of 2.8%. This triggered the yen's weakness, with the dollar trading at Y106.57 at 1005 GMT, up from Y106.05 late Thursday in New York.

The New Taiwan dollar, which initially succumbed to the yen's weakness, ended higher against its U.S. counterpart, thanks to the central bank's intervention and foreign equity fund inflows, dealers said.

The U.S. dollar closed at NT$30.786, compared with its previous close of NT$30.796.

Elsewhere, the Philippine peso recovered from its weakness earlier in the day when it got a boost from profit-taking by banks long on the U.S. currency, dealers said.

The dollar closed at 42.465 pesos, down from Thursday's close of 42.480 pesos, after rising to an intraday high of 42.575 pesos.