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.