Asian currencies mostly up but peso rally short lived
Asian currencies mostly up but peso rally short lived
SINGAPORE (Dow Jones): Most Asian currencies held on to their gains late Monday even after the Philippine peso failed to sustain its rally, as they looked to the Japanese yen for inspiration, dealers said.
The Indonesian rupiah closed higher Monday as offshore parties sold the dollar to exit the market amid confusion over Bank Indonesia's new rupiah trading regulations, dealers said.
The dollar closed at Rp 9,380, down from Rp 9,450 Friday.
"Offshore parties squared their positions and chose to stay on the sidelines until they fully digest the new regulations," said a dealer with a foreign bank in Jakarta.
Bank Indonesia last week banned lending of rupiah to non- Indonesian residents to reduce the supply of the rupiah that can be used for speculation offshore.
The market, however, remains confused over which transactions are still allowed and which are forbidden.
Even after a lengthy discussion with Bank Indonesia last Thursday, foreign bankers are still unclear with the new regulations.
Their plan to meet Bank Indonesia again Monday was delayed to Tuesday as Bank Indonesia needs more time to prepare answers to their written questions, said a foreign banker.
Dealers said they expect offshore participants' position squaring to continue pressing the dollar Tuesday to Rp 9,300 before local companies drive the unit up. Local companies are still keen to buy the dollar to repay offshore debts, dealers said.
The dollar upside potential is expected to be limited at Rp 9,425 Tuesday, dealers said.
The Philippine peso turned out to be a damp squib as the euphoria following the ouster of former President Joseph Estrada proved to be short-lived.
After opening stronger at 46 pesos against the dollar, following the swift ouster of former Philippine president Joseph Estrada and the peaceful succession of Gloria Macapagal-Arroyo over the weekend, the Philippine currency lost ground on corporate demand for dollars, dealers said.
The dollar closed at 49.30 peso on the Philippine Dealing System, up from Friday's close of 47.50 peso. The peso had surged almost 15 percent in the last one-and-a-half hours of trading Friday as Estrada's departure appeared imminent with the defections and resignations from the military brass and his key economic team.
Elsewhere, Asian currencies were wedged in narrow bands amid lackluster trading, as participants limited their activity to position squaring ahead of the Chinese New Year celebrations later this week.
Continued strength in the Japanese yen and strong corporate dollar demand kept the currencies buoyed, dealers said.
At 0930 GMT (4:30 a.m. EST), the dollar was quoted at Y116.65, below Y117.25 late Friday in New York. The dollar was at Y117.59 late Friday in Tokyo.
Bank of Japan Governor Masaru Hayami's brief comment Friday that "the yen is too weak" reverberated through the market again, even though Finance Minister Kiichi Miyazawa - whose ministry controls the nation's currency policy - stuck to his view that the weaker yen wasn't yet a concern.
In Seoul, the dollar finished at 1,273.9 won, down from Friday's close of 1,276.8 eon ahead of a three-day holiday, which starts Tuesday.
Against the Singapore dollar, the U.S. currency was at S$1.7348, down from S$1.7377 late Friday.
In the Thai currency market, the dollar was at 43.090 baht, little changed from 43.065 baht.