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.