Indonesian Political, Business & Finance News

Asian monies generally down but Korea won bucks trend

| Source: DJ

Asian monies generally down but Korea won bucks trend

SINGAPORE (Dow Jones): Most Asian currencies were weaker late Wednesday as the sagging Indonesian rupiah continued to unsettle its Southeast Asian counterparts.

In contrast, the South Korean won outshined its regional peers as dollar-selling by exporters propelled the currency to a four- month high.

After having been trapped in a range of 1,110 won to 1,120 won over the past two months, the dollar finally collapsed below the 1,110 won psychological support level at the open.

The dollar finished at 1,108.50 won, its lowest closing level since April 26, when it ended at 1,108.10 won. The U.S. currency finished Tuesday at 1,110.10 won. The dollar had earlier fallen to as low as 1,108.10, its weakest performance since April 26, when it touched 1,107.60 won.

The wave of month-end dollar-selling by local exporters and dollar-selling by offshore participants in the non-deliverable forward market supported the won, but dollar buying by state banks kept a rein on the U.S. currency's slide, dealers said.

After snapping out of its long-standing trading range, the won is poised to make further gains, some analysts said.

The dollar could descend further to 1,105 won "over the next week or two" and "possibly even lower," before eventually testing the downside target of 1,100 won in the next few months, said David Simmonds, a regional currency strategist at Salomon Smith Barney/Citibank.

Southeast Asian currencies remained shaky as the Indonesian rupiah extended Tuesday's decline on heightened concerns over relations between the country's new economic team and the International Monetary Fund.

The new senior economic minister, Rizal Ramli, known to be a critic of the IMF, said in a statement late Tuesday that he may want to change some details of the latest agreement with IMF that was signed by the previous cabinet last month. Rizal had asked the lending agency to delay its next disbursement of financial aid to give time for a review of the $5 billion program.

Uncertainty about the nature or the extent of the planned changes to the agreement has made the market nervous, dealers said.

Rizal's comments had sent the rupiah reeling to as low as Rp 8,430 to the dollar in London trading hours Tuesday.

But the rupiah was well-contained within a range of Rp 8,370 to Rp 8,430 in Asia Wednesday. Dollar short-covering by offshore players kept the currency buoyed, while heavy offers to sell the dollar close to the Rp 8,450 level stymied the currency's rise.

Around 0840 GMT, the dollar was at Rp 8,385, up from Rp 8,300 late Tuesday in Asia.

Despite the market's concerns, Standard Chartered Bank's treasury economist, Steve Brice, said Rizal's decision to review the IMF program was unsurprising since the new economic team "is just coming in to evaluate the system."

"We won't view it as too negative at this stage," Brice said, but added that the government "doesn't have a lot of time."

"They really need to decide what they're going to do and do it fairly quickly to restore market confidence," he said, adding that he expects a "slightly weaker bias in the short term" for the rupiah.

The rest of the Southeast Asian currencies felt the brunt of the rupiah's weakness.

The Thai baht weakened to 40.985 baht to the dollar, from 40.875 baht late Tuesday.

Against the Singapore dollar, the U.S. currency edged up to S$1.7230 from S$1.7213 late Tuesday.

Elsewhere, the dollar closed at 45.087 pesos on the Philippine Dealing System, up from Tuesday's close of 45.035 pesos. The dollar rose to a fresh one-month high earlier in the session at 45.105 pesos, its highest since 45.120 pesos on July 27.

In North Asia, the New Taiwan dollar finished marginally higher as the central bank continued its efforts to prop up the local currency, which remains vulnerable to a slumping local stock market, dealers said.

The U.S. dollar ended at NT$31.067, down slightly from NT$31.070 late Tuesday.

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