Asian monies rebound on RI's decision to allow peacekeepers

Asian monies rebound on RI's decision to allow peacekeepers

HONG KONG (Dow Jones): Asian currencies rebounded strongly
Monday following Indonesia's decision to allow foreign
peacekeepers into East Timor.

The Indonesian rupiah, the Thai baht and the Philippine peso
all strengthened rapidly at the start of local trading hours, as
market participants responded to President B.J. Habibie's late-
Sunday announcement by rushing to liquidate long U.S. dollar
positions established ahead of the weekend.

In conditions of near-total illiquidity, rupiah purchases
worth as little as $20 million were sufficient to drive the
rupiah up by 8 percent from levels seen late Friday, said
traders, as the U.S. currency was sold down to an intraday low of
7,700 rupiah.

The effect proved relatively short-lived, however, as heavy
buying of dollars against the rupiah by a major U.S. bank in
Singapore soon lifted the U.S. currency off its low.

Although the crisis in East Timor may have abated, the outlook
for the rupiah remains bleak, as market participants focus once
again on the scandal centered on the irregular transfer of $80
million from Bank Bali to a company closely associated with
Habibie's Golkar party.

"The rupiah was sold off last week on fears that international
aid to Indonesia would be halted because of the East Timor
situation," said a regional-currency trader at a U.S. bank in
Singapore.

"Pressure from that quarter has eased now, but there is still
the Bank Bali case. Everybody knows how unhappy the International
Monetary Fund is about that, so the market will not be so
trigger-happy to buy up the rupiah again," he said.

Toward the end of Asian interbank trading, the U.S. currency
was quoted at Rp 7,850. Although at that level the dollar was
considerably above its earlier low, it remained well down from Rp
8,312 late Friday.

In the short term, heavy bidding interest should support the
U.S. currency above Rp 7,800, said traders, although offers from
market participants caught long dollars at higher levels should
cap the market at Rp 8,000.

There was no impact on trading from the announcement by
ratings agency Standard & Poor's Corp. that it was placing
Indonesia on CreditWatch with negative implications because of
the threat to international lending posed by the East Timor
crisis. Dealers shrugged off the news, saying S&P was about two
weeks behind the rest of the market.

Trading in the baht followed a similar pattern. After
strengthening at the start of Asian trading, the Thai currency
later gave back some of its initial gains in response to dollar
purchases, mostly executed by U.S. banks in the offshore market.

Late in Asian trading, the U.S. dollar was quoted at 39.3200
baht, up from its earlier low of 39.2300 baht but below 39.4450
baht late in Asian dealing Friday.

The Philippine peso, too, weakened from its early high, but
still ended local trading well up on the day.

After a rash of long liquidation propelled the dollar to an
early low of 39.730 pesos, the U.S. currency clawed its way
higher again during the remainder of the session.

At the close of trading the U.S. dollar was quoted at 39.860
pesos, up from a low of 39.730 pesos, but down from 39.943 pesos
Friday.

Against the Singapore dollar, the U.S. currency ended Asian
trading hours at S$1.6890, compared with S$1.6884 late Friday.

In other markets, the Korean won closed marginally higher
against the U.S. dollar, its rise assisted by the yen's continued
strength against the U.S. currency and a positive assessment of
Korea's economic outlook from finance and economy minister Kang
Bong-kyun.

At the Seoul close the U.S. dollar was at 1,191.80 won, down
slightly from 1,192.20 won at the end of Friday's trading
session.

In Taipei, the U.S. currency closed at NT$31.780 against the
New Taiwan dollar, down from NT$31.800 on Friday.