Asian monies mixed late, market mulls rupiah's developments
Asian monies mixed late, market mulls rupiah's developments
SINGAPORE (Dow Jones): Asian currencies were mixed late
Friday, with the Indonesian rupiah holding steady as market
players digested the latest political developments in Jakarta.
The stabilizing rupiah helped the Thai baht gain ground. The
Singapore dollar, New Taiwan dollar and Philippine peso all
weakened, while the South Korean won finished trading unchanged.
Indonesian President Abdurrahman Wahid Friday signed a decree
formalizing the delegation of duties to his popular deputy,
Megawati Sukarnoputri.
The market has been generally supportive of Megawati's new
role announced earlier this month, but analysts say there is no
guarantee the vaguely worded decree will end the political
infighting that has caused the rupiah to slump.
Late Friday the Indonesian currency was quoted at Rp 8,395 to
the dollar, compared with Rp 8,400 per dollar late Thursday.
The decree delegates the day-to-day management of government
operations to Megawati and allows her to review the performance
of the cabinet.
However, it fails to detail what powers she will have to carry
out those duties, analysts said.
"The document is just a formality," said Arbi Sanit, a
professor at the University of Indonesia. "In practice, it won't
be effective, as it isn't detailed."
Market participants are probably waiting to see what the
reaction is from Megawati herself, said Steve Brice, treasury
economist at Standard Chartered Bank in Singapore.
The rupiah could strengthen to Rp 8,000 per dollar next week
if Wahid's recent cabinet reshuffle proves successful and the
market gains confidence that economic reforms will be carried
out, Brice said.
But, ING Barings, asserting that it expects markets to remain
"uncomfortable" with Indonesian politics, said it is maintaining
its forecast that the rupiah will weaken Rp 8,870 to the dollar
by the end of the year.
In a research note written Thursday and received Friday by Dow
Jones Newswires ING Barings said that Wahid, in choosing new
cabinet members "ignored an obvious opportunity to make amends"
with Megawati.
In Thailand, dollar-selling by exporters helped lift the baht,
dealers said. Toward the end of trading the U.S. dollar was
quoted at 40.875 baht, down from 41.020 late Thursday.
An uptrend in the Thai stock market over the past month also
has helped support the baht, Standard Chartered's Brice said.
A more stable interest rate environment in the U.S. has
boosted investor appetite for risker assets, such as Thai stocks,
he said. This has helped offset the negative market sentiment
stemming from the political turmoil in Thailand, Brice added.
In Seoul, currency dealers refrained from speculative trading
to protest what they claim has been excessive intervention in the
market by the Korean government. The lack of activity left the
won unchanged at 1,114.10 to the dollar.
Dealers at most local and foreign banks agreed Thursday not to
engage in speculative trading until the end of business Tuesday.
They claim the government's continued efforts to support the
dollar has forced the U.S. currency into such a tight range that
it has curtailed their ability to make profits on trades.
The New Taiwan dollar was pressured by month-end importer
demand for the U.S. dollar and sluggishness in the local stock
market, dealers said.
The U.S. dollar closed at NT$31.072, compared with the
previous close of NT$31.069.
The Singapore dollar weakened slightly in quiet, range-bound
trading. Near the end of the session the U.S. dollar was quoted
at S$1.7206, up from S$1.7200 late Thursday.
Against the Philippine peso, the dollar closed at 44.040
pesos, down from 44.980 pesos at the previous close.