Asian currencies mostly up late on improved rupiah sentiment

Asian currencies mostly up late on improved rupiah sentiment

SINGAPORE (Dow Jones): Improved sentiment toward the Indonesian rupiah pushed most Asian currencies higher late Tuesday, dealers said.

The New Taiwan dollar was marginally higher after the central bank intervened, while the South Korean won recovered from Monday's steep decline. The Philippine peso and the Singapore dollar were steady late in the day after having relinquished earlier gains.

Despite the rupiah's firmer undertone as Indonesia's top legislators met for the second day Tuesday, sentiment toward the currency remains frail, dealers said. Domestic corporate dollar buying interest is expected to emerge toward the Rp 8,500 level, and some offshore participants are seen preparing to build up long dollar positions again at lower levels.

The Indonesian currency failed to sustain its rise after climbing earlier in the day to its highest level in almost eight weeks.

Around 0750 GMT, the dollar was at Rp 8,573, down from Rp 8,625 late Monday. The dollar briefly retreated to as low as Rp 8,540 rupiah early Tuesday, its lowest level since mid-June, on liquidation of long positions and stop-loss selling, dealers said.

While President Abdurrahman Wahid has so far been relatively unscathed at the meeting of the People's Consultative Assembly, also known as the MPR, the road is expected to remain bumpy for the embattled leader, market watchers said.

Market participants were heartened by Wahid's positive address Monday to the assembly and his plans for a cabinet reshuffle, but may be "lulled into a false sense of security," said Simon Flint, currency analyst at Bank of America.

"A little more heat could be directed at the president" as the legislators air their grievances during the session, Flint added.

"It's only been two days into the MPR," a dealer at a European bank said. "Things can still happen."

If the dollar retreats to Rp 8,525-8,550 again, "these are good levels to buy," he said. He added that he is betting for the dollar to advance to Rp 8,700-8,725, and doesn't rule out a further rise to as high as Rp 8,900 should there be any strong negative developments in Indonesia.

Ahead of Singapore's National Day holiday Wednesday, banks were liquidating their accumulated U.S. dollar positions against the Singapore dollar and the Thai baht, pushing these currencies higher.

The dollar was at 41.110 baht late Tuesday, down slightly from 41.115 baht Monday. The dollar earlier briefly sunk below the 41 baht psychological support level.

The Singapore dollar lost some ground after strengthening earlier in the day to S$1.7245 to the U.S. currency, amid concerns that the rupiah could weaken, dealers said. Late in the day, the U.S. currency was at S$1.7260, barely changed from S$1.7262 late Monday.

Singapore market participants will be closely watching Prime Minister Goh Chok Tong's National Day address, scheduled to start at 1200 GMT Tuesday. The market has been speculating that Goh may hint of, if not announce, an upward revision in Singapore's 2000 economic growth forecast from the current range of 5.5 percent to 7.5 percent.

Against the peso, the dollar closed little changed at 44.875 pesos on the Philippine Dealing System, compared with Monday's 44.845 pesos, after the peso recovered some of it losses earlier in the day.

Concerns prevail that the Philippine government would overshoot its budget deficit target of 62.5 billion pesos for this year. After government officials reiterated in the past weeks that it was adhering to this deficit target, Finance Secretary Jose Pardo finally said Tuesday that the government will decide in September whether to adjust the target.

The South Korean won ended higher on dollar-selling by local banks and exporters, dealers said. The dollar finished at 1,115.90 won, down from Monday's close at 1,117.30 won.

Against the New Taiwan dollar, the U.S. currency was at NT$31.088, down from Monday's close at NT$31.092. Dealers attributed the New Taiwan dollar's rise in part to a stronger yen and inflows of equity funds.