Asian monies down late, rupiah sets weaker tone

Asian monies down late, rupiah sets weaker tone

SINGAPORE (Dow Jones): Asian currencies were lower late Monday, weighed on by the rupiah as the Indonesian political climate heats up in the countdown to a key parliamentary assembly next month.

Many currency watchers are optimistic that the U.S. dollar could run up to Rp 10,000 before the People's Consultative Assembly, or MPR by its Indonesian acronym, meets in mid-August to review President Abdurrahman Wahid's performance. This is expected to drag down the other Southeast Asian currencies.

"These currencies will remain weak in this region until we get some conclusion from the MPR next month," said Mansoor Mohi- uddin, foreign exchange strategist at UBS Warburg.

In late trade, the dollar was at Rp 9,520, up from Rp 9,461 late Friday. The dollar had climbed to Rp 9,575 in early trading, but was capped by profit-taking in the U.S. currency and fears of dollar-selling by state banks, dealers said.

Although the head of the assembly, Amien Rais, had reportedly said over the weekend it was unlikely Abdurrahman, more popularly called Gus Dur, would be impeached by the country's highest legislative body, investors remained nervous.

Investors are first bracing for an expected showdown Thursday between Gus Dur and the Indonesian parliament over his controversial sacking of two ministers earlier this year, dealers said.

Even Indonesia's deadline Thursday to meet economic reform targets set with the International Monetary Fund "will be overshadowed by the bright spotlight on Gus Dur," said Sani Hamid, an analyst at market consultants Standard & Poor's MMS International.

Although the yen has had little impact on Asian currencies in recent months, caution prevailed as investors kept a close watch on whether Bank of Japan would end its 17-month-long zero interest rate policy at its board meeting Monday, dealers said.

Currency watchers correctly predicted the possibility that the BOJ would leave its zero interest-rate policy unchanged, following local newspaper reports over the weekend that the BOJ might want to monitor the effects of Sogo Co.'s failure on the country's stock market and its economic recovery before changing the current monetary policy.