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.