Bank Indonesia will intervene in currency market `if necessary'
JAKARTA (JP): Bank Indonesia will intervene in the currency market to prop up the ailing rupiah if such a measure would have a positive result, deputy governor Achjar Iljas said on Friday.
"We'll intervene if it will be positive. After all, intervention is part of our policy," Achjar told reporters.
Achjar did not say when the central bank would start selling its dollars, but his comments helped lift the rupiah from its intraday low of Rp 9,125 per U.S. dollar to end at Rp 9,065 late on Friday. This is the lowest exchange rate since July.
The rupiah was at Rp 9,010 late on Thursday.
The rupiah has been under pressure due to a combination of domestic political concern and the weakening Philippine peso.
Opponents of President Abdurrahman Wahid have increased pressure on the President to step down amid continuing violence and unrest in several areas of the country.
The government has assumed a rupiah value of Rp 7,000 per U.S. dollar in the 2000 state budget, and Rp 7,300 for the 2001 budget.
Meanwhile Dow Jones reported that the Philippines peso remained at center stage in Asian currency trading Friday as President Joseph Estrada's political troubles pushed it to new lows.
Once again, the peso's troubles pulled down currencies in neighboring Southeast Asian markets, with the Indonesian rupiah and Thai baht falling in sympathy. The Singapore dollar was weaker much of the session but edged up late in the day.
The New Taiwan dollar also fell after a government decision to halt work on the island's fourth, and controversial, nuclear power plant.
On the peso, Rebecca Patterson, currency strategist with JP Morgan, said: "Our yearend target (for the U.S. dollar) has been 52.00 baht, but the risks to this target are getting larger by the minute."
The U.S. dollar was trading at 51.07 pesos late Friday, up from 50.34 pesos Thursday, having hit a high of 51.30 pesos earlier in the day.
And none may in the works, judging by central bank Governor Rafael Buenaventura's comment that "monetary tools shouldn't be used to address non-monetary problems."
The peso's plunge spelt trouble for the other Southeast Asian currencies as well. The Thai baht was trading at 43.67 baht to the U.S. dollar late in the day, putting the U.S. unit up a touch from 43.665 baht late Thursday.
JP Morgan's Patterson said so long as the peso is in trouble it will be difficult for the baht to change direction. But she added there's been some decent two-way flow in the baht, and it's not under the same pressure as the peso.
She said the U.S. currency could get up to 45.00 baht, although in far less dramatic fashion than the fall of the peso.
Against the Indonesian rupiah, the U.S. dollar moved up to Rp 9,050, compared with Rp 9,030 late last session. Against the Singapore dollar, it was trading slightly lower at S$1.7524, from S$1.7540.
Further north, the Taiwanese currency was having some trouble Friday after the ruling Democratic People's Party said it would stop construction on a fourth nuclear power plant in Taiwan.
The move has "revived concerns about political infighting between the KMT and the DPP," said Chi Lo, regional economist with Standard Chartered Bank, adding "with the scrapping of the plan, the battle is over but not the war."
Against the island's currency, the U.S. dollar was trading at NT$32.135 late Friday, up from NT$32.09 late last session.
The Korean won was up marginally, meanwhile, with the U.S. dollar trading at 1,134.8 won, compared with 1,136.5 won late last session. (rei)