Asian monies tumble late, rupiah casts pall over region
Asian monies tumble late, rupiah casts pall over region
SINGAPORE (Dow Jones): The foundering Indonesian rupiah Monday cast a pall over regional Asian currencies already under pressure from what analysts say is an impending hike in U.S. interest rates later this week.
The rupiah has taken a pummeling in recent weeks amid growing investor skepticism about the Indonesian government's ability to push ahead with reforms and keep the economic recovery on track.
President Abdurrahman Wahid said Monday he had no plan of action to keep the currency from falling further, but added he would be discussing the situation with his economic ministers in the coming days if the weakness persists.
An outbreak of rioting in the streets of Jakarta's Chinatown over the weekend provided the latest impetus for market players to dump the rupiah.
Late Monday, the dollar was quoted at Rp 8,541, up from Rp 8,485 late Friday.
The currency had been pushed to seven-month low of Rp 8,768 to a dollar at one point last Friday following a confusing barrage of comments by Indonesian policy makers. Wahid helped the currency rebound at the day's end by saying the government was prepared to act if the currency remained weak.
That sparked speculation that he was prepared to impose some type of capital controls, but on Monday he said his comments were misinterpreted.
The Singapore dollar couldn't escape the gravitational pull of the falling rupiah.
Late in Asia the U.S. dollar was quoted at S$1.7296, up from S$1.7243 late Friday.
Although the Singapore dollar mimicked the rupiah, its swings were far more moderate, and its losses were capped by expectations that the Monetary Authority of Singapore would intervene above the level of S$1.7300.
Some analysts said there was a chance that the Singapore dollar and rupiah could get a boost if investors move to liquidate their long U.S. dollar positions ahead of Tuesday's Federal Open Market Committee meeting in the U.S.
Market players have been snapping up U.S. dollars on expectations that the FOMC will raise short-term rates by a half percentage point, and that it likely will continue raising rates later in the year.
The Philippine peso also suffered under the weight of the expected narrowing of interest rate differentials with the U.S.
Profit-taking by banks long on dollars capped the U.S. currency's gains, however, dealers said.
The dollar closed at 41.560 pesos on the Philippine Dealing System, up from Friday's close at 41.500 pesos.
Concerns over the conflict in southern Mindanao between Muslim rebels and government troops, as well as questions on the stability of the banking industry, have been brushed aside for the time being, traders said.
The South Korean won slipped to its lowest closing level against the U.S. dollar in nearly eight weeks on dollar buying by overseas players in the non-deliverable forward market.
The dollar closed at 1,114.70 won, up from 1,114.50 won on Friday. It was the highest close for the U.S. dollar since March 21 when it reached 1,116.40 won.
The New Taiwan dollar ended weaker on concerns over relations with China and the ailing stock markets in Taiwan.
The U.S. dollar closed at NT$30.767, up from NT$30.735 Friday. Trading was light as many market participants were sidelined, awaiting President-elect Chen Shui-bian's inauguration speech Saturday, hoping for clues on future relations with China, dealers said.
Rupiah weakness weighed on the Thai baht, which breached the a key support level of 39.200 to a dollar. Lack of liquidity in the rupiah forced some dealers to sell the baht in a proxy move.
In late trading the dollar was quoted at 39.250 baht, up from 38.845 baht late Friday.