Asian currencies move higher, rupiah sentiment gets a boost
Asian currencies move higher, rupiah sentiment gets a boost
HONG KONG (Dow Jones): Asian currencies ended mostly higher Thursday as the yen stabilized, removing much of the downward pressure on the regional currency markets.
The rupiah edged higher, but interest to buy the Indonesian currency remained limited despite the prospect of sizable inflows in the short-to-medium term.
While visiting Jakarta, Singapore Prime Minister Goh Chok Tong pledged to set up two investment funds aimed at channeling over US$500 million in investment into Indonesian companies.
Meanwhile the new head of the Indonesian Bank Restructuring Agency declared his intention to press ahead with plans to raise over $2 billion by March 31 through asset sales.
Hopes are also high that the International Monetary Fund will release around $1 billion in assistance funding to Indonesia later this month, once the country's 2000 budget is approved by parliament.
Andrew Fung, regional treasury economist at Standard Chartered Bank in Singapore, cautioned against expecting massive investment inflows to lift the rupiah in the near future.
The most immediate impact will come from the release of the IMF funds, some of which Bank Indonesia will convert by drip feeding small amounts into the market, he said.
But any Singapore-backed investment is likely to proceed cautiously, and only after exhaustive due diligence, while the IBRA sales will take time to set in progress.
"IBRA is treading a fine line between accelerating the process and on the other hand making sure that the process is transparent and rule-based," Fung said.
Toward the end of Asian trading, the dollar was quoted against the rupiah at Rp 7,210, down from Rp 7,285 the day before.
The South Korean won also set the pace, rising strongly from the start of trading in Seoul as dealers reported robust interest from international investors to buy the local currency.
Sentiment toward the won was further boosted when the Bank of Korea released its monetary policy statement for the year.
Central bank Governor Chon Chol-hwan said the Bank of Korea would concentrate on maintaining domestic price stability, warning he would take "preemptive steps" to counter inflation.
Chon also forecast that long term interest rates, as represented by the benchmark three-year corporate bond yield, would stabilize around current levels of 10.36%, and further predicted the supply of dollars in the foreign exchange market would exceed demand as trade and investment flows continue to favor the won.
Most market watchers took this as a clear hint the BOK will allow the won to strengthen over the course of 2000, believing that the central bank prefers to use currency appreciation rather than higher interest rates to combat inflation.
At the end of Thursday's session in Seoul, the dollar was quoted at 1,135.10 won, down from Wednesday's rate of 1,145.50 won.
Investor interest to buy the New Taiwan dollar was also strong Thursday, but heavy U.S. dollar purchases worth well over $100 million executed by the central bank in the last few minutes of trading in Taipei ensured the local currency ended the day weaker.
At the close, the U.S. dollar was quoted at NT$30.838, up from NT$30.828 the previous day.
Among other regional currencies the Thai baht closed higher, but both the Singapore dollar and the Philippine peso ended the day down slightly.
Against the baht, the dollar ended Asian hours at 37.450 baht, down from 37.655 baht the previous day.
Against the Singapore dollar, the U.S. currency was quoted at S$1.6680, up from S$1.6672.
In Manila the U.S. unit ended at 40.600 pesos, compared with 40.580 pesos Wednesday.