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.