Asian currencies mixed, rupiah closes higher

Asian currencies mixed, rupiah closes higher

SINGAPORE (Dow Jones): Asian currencies were mixed late Wednesday, as the market displayed a non-committal reaction to the close finish of the U.S. presidential election, dealers said.

While Asian currencies had barely reacted to earlier reports Republican presidential candidate George W. Bush had likely defeated Democrat candidate Al Gore, it is now unclear whether Bush has actually won the election. Gore's campaign manager has sought a recount of the results in Florida, with Gore refusing to admit defeat.

Most analysts said they don't expect any significant shift in U.S. trade or foreign policy even under a Republican administration, which would therefore have minimal impact on Asian currencies in the medium term.

"Essentially, we see no change in U.S. trade or foreign policy resulting from a change in administration and therefore we see very little medium-term impact on Asian currencies resulting from a Bush or Gore victory," said Peter Redward, a regional currency strategist at Deutsche Bank.

Longer term, however, the risk for Asian currencies could come from the way the new administration links trade relations to labor issues and environmental standards, analysts said.

Taking center stage in Asia, President Joseph Estrada's defiance in the face of mounting pressure for him to step down continued to weigh on the Philippine currency, which slumped below 50 pesos against the dollar.

Most other Asian currencies were wedged in tight ranges as the close U.S. presidential race kept market participants on the defensive.

The Indonesian rupiah closed higher Wednesday on dollar sales by state banks, as the market shrugged off the confusion over the winner of the U.S. presidential race.

Early predictions of a win by Republican candidate George W. Bush failed to lift the dollar against the rupiah, with most market participants preferring to focus on local political developments.

Late in the Asian day, U.S. electoral officials still hadn't named a winner of the election.

With little impact from the U.S. elections, the dollar closed lower at Rp 9,195 in Asia, from Rp 9,255 late Tuesday.

News Indonesia is still mulling plans to force local exporters to convert their dollar receipts back into the local currency also helped the rupiah.

Although Trade and Industry Minister Luhut Panjaitan said Wednesday the government is still far from a decision, his comments will refresh talk of forced repatriation of dollars in the foreign currency markets.

Still, instability on the local political front, notably a higher court's decision to reopen former President Suharto's corruption trial, continued to weigh on the rupiah.

The peso extended Tuesday's decline, after hopes of an early and voluntary exit by President Estrada receded.

Estrada has denied accusations he took bribes from gambling lords and has vowed to clear his name. A possible impeachment trial in the senate could start later this month.

Gerard Teo, an economist at ABN AMRO, said that a conference call with central bank governor Raphael Buenaventura suggested the authorities believe the political quandary will be resolved constitutionally and that this could take place by year-end.

This could spark a "relief rally" in Philippine asset markets, he added.

He said that ABN AMRO may adjust its end-2001 forecast of 55 pesos if the country's "risk premium eases with a successful political resolution", although it is maintaining this forecast for now. The bank expects the dollar to trade at 50 pesos at the end of this year.

The dollar closed at 50.100 pesos on the Philippine Dealing System, up from Tuesday's close of 49.250 pesos. The dollar hit an intraday high of 50.480 pesos.

In the Thai currency market, the dollar eased to 43.57 baht from 43.625 baht late Tuesday.

A surge on Nasdaq futures sparked by earlier reports of a Bush victory salvaged the South Korean won, which was hit by worries over restructuring efforts at Hyundai Engineering & Construction Co. and Daewoo Motor Co, dealers said.

The dollar finished at 1,134.30 won, down from Tuesday's close of 1,136.10 won.

The New Taiwan dollar continued to be boosted by foreign equity fund inflows, lured by the country's higher weighting in the widely tracked Morgan Stanley Capital International Indexes.

The U.S. dollar closed at NT$32.119, down from NT$32.149 Tuesday.