Asian monies up amid rupiah control rumors

Asian monies up amid rupiah control rumors

HONG KONG (Dow Jones): Talk of capital controls in Indonesia
rippled briefly through Asian foreign exchange markets on
Thursday, but the effects were short-lived and most currencies
ended slightly stronger in quiet dealings.

The U.S. dollar gained on the Philippine peso, but was down
against the Indonesian rupiah, the Thai baht, Singapore dollar
and Korean won.

"Dollar/rupiah was sold down on the rumor that there could be
some offshore trading restrictions put on the rupiah and bought
back when that was officially denied," said a dealer with a U.S.
bank in Singapore. The rupiah's regional counterparts loosely
followed the brief upturn, he said, reporting thin dealings in
all markets.

Indonesia's central bank isn't considering any form of
restrictions on offshore rupiah trading, said Halim Alamsyah
Thursday, who is head of the central bank governor's office. A
Indonesian newspaper report set off the talk, but the senior
official said the story had misquoted the central bank.

The U.S. dollar was quoted at Rp 8,310 late Thursday, down
from Rp 8,385 late Wednesday, but up from a low of Rp 8,255 after
the capital control rumor.

"This is the fourth time this year (the markets) have heard
this," said Rebecca Patterson, JP Morgan currency strategist, and
traders say they'll keep a wary eye on the issue. "If there's no
fire, there's no smoke," said one trader of the persistent talk
of controls.

But Patterson said "it would be extremely difficult for
Indonesia to impose effective capital controls." Her firm
maintains its view that the rupiah is in for more weakness over
the medium term.

The other issue of the day, said Patterson, was the sharp move
in the South Korean stock exchange, where the Kospi index closed
down 4.2 percent, although that's not had any adverse effect on
the local currency yet.

The U.S. dollar was trading at 1,108.30 won, down from
1,108.50 won late Wednesday.

Foreign investors were selling shares such as Samsung
Electronics and Hyundai Electronics Industries amid persistent
worries about the outlook for the South Korean semiconductor
industry, traders said.

Some market watchers said investors may have also been worried
by unfounded rumors that Samsung would soon face some sort of
credit rating adjustment. However, the source of the
misconception may have been news a few days ago that UBS Warburg
had downgraded its recommendation on the stock from a "strong
buy" to a "buy".

At any rate, Patterson said traders really should buy any
weakness in the won should it occur, based on JP Morgan's view
that the currency is likely to continue strengthening.

In Southeast Asia, dealers in Singapore said the Thai baht is
locked in a fairly tight range between 40.87 baht and 40.96 baht
to the dollar. It was quoted late Thursday at 40.935 baht, down
from 40.985 baht late in the previous session.

The Singapore dollar is likewise a little stronger, but in
what dealers said was quiet trade. The U.S. dollar was quoted at
S$1.7192 late Thursday, down from S$1.7230 in the previous
session.

Elsewhere, the dollar closed at 45.110 pesos, up slightly from
45.087 pesos. The U.S. dollar ended at NT$31.067, unchanged from
late Wednesday.