Asian monies mixed; rupiah weakness offsets yen
Asian monies mixed; rupiah weakness offsets yen
SINGAPORE (Dow Jones): Asian currencies were mixed late Wednesday, as a tug of war between a sagging Indonesian rupiah and a resilient Japanese yen kept the currencies confined within narrow trading bands, dealers said.
The rupiah extended Tuesday's descent, as the tussle between the Indonesian central bank governor and President Abdurrahman "Gus Dur" Wahid continued to discourage market participants, dealers said.
"What's going on damages the credibility of the president and suggests that he has little respect for the central bank's independence or for the due process of law," said Simon Flint, foreign exchange strategist at Bank of America.
"People's expectations of the imminent imposition of capital controls are also dropping off significantly, so there's very little reason to sell the dollar-rupiah at the moment."
After being named a suspect by the government in the Bank Bali scandal Tuesday, Bank Indonesia Governor Sjahril Sabirin won a reprieve from parliament, the only body authorized to dismiss him. Parliament can only fire Sjahril if he were found guilty.
Indonesian police chief General Rusdihardjo said Wednesday the police plan to investigate further a report by Bank Indonesia that allegedly accused President Wahid of interfering with the independence of the central bank. This failed to calm investor jitters.
Some observers said the conflict between the central bank and Gus Dur's administration could only get worse when the president starts his two-week world tour. The president is scheduled to leave Wednesday.
"Gus Dur (Wahid) tends to use his overseas trips as a megaphone to the world - especially when it comes to undermining his opponents," Flint at Bank of America said. "Pressure is likely to remain on the central bank governor for that reason."
In late trading, the dollar was at Rp 8,630, up from Rp 8,585 late Tuesday. Dealers said there were some offers around Rp 8,650.
Unverified rumors that some Indonesian companies would have to meet their debt repayment schedule over the next few months had also weighed on the rupiah.
The dollar is expected to climb further in the short term to the recent high of Rp 8,800 it reached in mid-May, market observers said.
Despite its vigor, the yen failed to tug most of the other regional currencies higher as much as it usually would, thanks to worries over the ailing rupiah, dealers said.
The dollar was at Y105.63 at 0855 GMT, below Y105.77 late Tuesday in New York.
Against the Thai currency, the dollar was at 38.895 baht, steady from Tuesday's level.
The dollar has also moved little vis-a-vis its Singapore counterpart, trading at S$1.7222 from S$1.7227 late Tuesday.
The Philippine peso, however, managed to retain some strength from the yen's rise.
The dollar closed at 42.360 pesos on the Philippine Dealing System, down from 42.380 pesos at the previous close. Dealers said banks unwinding long-dollar positions and thin corporate demand for the U.S. currency also underpinned the peso.
The market was cool to President Joseph Estrada's order to put the country on a 24-hour security alert during his state visit to Japan, which was seen as a "precautionary measure" aimed at increasing the vigilance of the police and military to terrorist attacks.
The New Taiwan dollar closed relatively flat, as importer buying of the U.S. currency damped the effect from a stronger yen.
The U.S. dollar closed at NT$30.791, little changed from Monday's close of NT$30.92.
The South Korean won ended at its highest level against the U.S. dollar in four weeks on demand for the local currency following heavy buying by foreign investors in the Seoul stock market, dealers said.
The dollar finished at 1,113.10 won, down from Monday's close at 1,117.40 won. Wednesday's closing level was its lowest since May 10 when it ended at 1,109.10 won.
The financial markets in Seoul and Taipei were closed Tuesday for national holidays.