Asian monies mostly weaker as rupiah dives

Asian monies mostly weaker as rupiah dives

SINGAPORE (Dow Jones): Asian currencies were mostly weaker late Tuesday, as market-soothing words from Indonesian President Abdurrahman Wahid helped stabilize the embattled rupiah.

Wahid called a news conference to refute reports that he was targeting opposition lawmakers as part of an investigation into corruption and riot-inciting in Indonesia.

Comments the Indonesian President, more popularly called Gus Dur, had issued over the weekend regarding the investigation were misinterpreted, he said.

"They (legislators) will be questioned only as witnesses. My other statement was twisted for political purposes," Wahid said at the news conference.

The rupiah, which had touched an almost 16-month low of Rp 9,000 to the dollar in early trading, staged a modest recovery after Wahid's comments to finish the day at Rp 8,600, unchanged from Monday's close.

Gus Dur nonetheless acknowledged that the political infighting and sectarian violence in the Maluku islands is taking its toll on the currency.

"The rupiah weakness is because the market knows that the problem faced by Indonesia is very complicated, that there is disharmony among the people of Indonesia," he said.

Currency dealers said the rupiah will remain under pressure until Indonesia's political and economic situation improves.

"We are worried that if this political mudslinging doesn't end or get better, confidence in Indonesia will be severely eroded and the rupiah could be headed toward the 10,000 level in one month's time," said Syetarn Hansakul, economist at WestLB Bank in Singapore.

The Philippine peso, which also is suffering from negative investor sentiment, also traded lower against the U.S. dollar.

The dollar climbed to a 21-month high of 43.600 pesos in intraday trading as the narrowing differential between U.S. and Philippine interest rates prompted investors to shift their holdings to dollars.

By the close, the dollar edged back to 43.535 pesos, up from 43.530 pesos at Monday's finish.

The South Korean won declined on the heels of a weaker yen and fears of a strike next week by employees at local financial institutions, traders said.

The dollar closed at 1,115.30 won, up from 1,113.80 won a day earlier.

The won also took a hit from a drop in the Korea Composite Stock Price Index, or Kospi, which closed down 16.68 points, or 2 percent, to 818.53.

The softer yen and falling stock prices put pressure on the New Taiwan dollar as well.

The U.S. dollar closed at NT$30.822, up from NT$30.812 late Monday.

The Thai baht closed slightly higher Tuesday as investors took profit on the back of the dollar's recent strong performance, traders said.

The dollar finished at 39.355 baht, down from 39.362 baht at the Asian close Monday.

The Singapore dollar finished lower as corporate dollar buying kept the U.S. dollar well bid, dealers said.

Late Tuesday, the U.S. dollar was quoted at S$1.7327, up from S$1.7317 late Monday in Asia.

Market participants were reluctant to push the U.S. currency much higher because of fears the Monetary Authority of Singapore might intervene at levels above S$1.7340, a dealer at a European bank said.