Asian monies up, rupiah strengthens

Asian monies up, rupiah strengthens

Netty Ismail, Dow Jones, Singapore

Continuing foreign equity inflows into local stock markets and the yen's gains bolstered most Asian currencies late Wednesday, dealers said.

The Indonesian rupiah's new found strength provided additional support to its Southeast Asian peers, although fears of intervention by the central banks in Singapore and Thailand stymied their currencies' rise.

The rupiah extended its climb toward Rp 9,900 resistance, as interbank participants continued to sell U.S. dollars in anticipation of inflows from the Indonesian government's impending sale of its 51 percent stake in PT Bank Central Asia, observers said.

The rupiah, trading at near five-month highs, hit an intraday high of Rp 9,915 before retreating to around Rp 9,950 late Wednesday. The rupiah was weaker at Rp 9,980 late Tuesday.

Improving prospects for the privatization of state-held assets in Indonesia - which would underscore the government's commitment to economic reforms - helped thrust the rupiah through the psychologically important Rp 10,000 threshold Tuesday.

"With corporate bids for debt repayment still much on the sidelines, the rupiah looks well positioned to test Rp 9,800," Bank of America said in a research report.

The Thai currency strengthened to an intraday high of 43.490 baht to the dollar, thanks to strong foreign equity inflows and dollar sales by U.S. funds - as they simultaneously unloaded their dollar positions against the yen, dealers said.

But the baht subsequently pulled back past the 43.500 bath level on market suspicions that the Thai central bank had bought dollars via two of its agent banks based in Singapore to check the baht's advance, market observers said.

At 0915 GMT (4:15 p.m Jakarta time), the dollar was at 43.515 bath, lower than 43.665 bath late Tuesday.

Against the Japanese currency, the dollar was quoted at 131.84 yen, below 132.13 yen in New York and 132.53 yen in Tokyo late Tuesday.

Market speculation that the Monetary Authority of Singapore had intervened to check the strength of the local currency Wednesday provided a floor for the U.S. dollar around S$1.8250, observers said.

The U.S. dollar slid to an overnight low of S$1.8222 on long- liquidation, but subsequently bounced back on suspected intervention by the MAS, some dealers said.

A large Singapore bank bought a "significant amount" of U.S. dollars around S$1.8260 during the Asian session Wednesday, moderating the upward pressure on the Singapore currency despite the firmer yen and local stock market gains, said a dealer at a European bank.

Although some dealers said the Singapore bank was buying U.S. dollars on behalf of its corporate clients, jitters about central bank intervention led some to speculate that the Singapore bank was acting at the behest of the central bank.

The South Korean won closed at 1,316.3 won against the dollar, little changed compared with 1,316.4 won Tuesday.

The won strengthened to an intraday high of 1,313.7 won earlier, before retreating as foreign investors turned net sellers of South Korean shares and onshore demand for dollars emerged when the U.S. currency traded below 1,315 won support, said Mansoor Mohi-uddin, a regional currency strategist at UBS Warburg.

State-run banks, like Korea Development Bank, or KDB, were snapping up dollars on behalf of corporations and oil importers, said a dealer at a European bank in Singapore.

Some market participants also believe that South Korea's central bank had intervened through KDB, he added.

Expectations that the yen will remain rangebound - as foreign exchange participants attempt to defend their currency options positions - also limited the won's upside, said Mohi-uddin.

"External factors are not that bullish for the won," said Mohi-uddin.

The New Taiwan dollar closed stronger on foreign equity inflows, but was off its intraday high as the central bank intervened to curb the local currency's appreciation, dealers said.

A Taipei-based dealer estimated that the central bank accounted for about half of Wednesday's turnover.

The U.S. dollar ended at NT$35.030, slightly lower than NT$35.069 Tuesday. The New Taiwan dollar hit an intraday high of NT$34.995 Wednesday.

Trading volume was US$602 million, higher than US$458 million Tuesday.

Buoyed by its regional counterparts, the Philippine peso closed at 51.090 peso to the dollar, compared with 51.160 peso Tuesday.