BI intervenes to prop up rupiah amid calm market

BI intervenes to prop up rupiah amid calm market

SINGAPORE (AFP): Indonesia's central bank intervened yesterday
to prop up the ailing rupiah amid an uneasy post-Christmas calm
in Asian currency markets following the South Korean won's sharp
rebound, dealers said.

Most troubled regional currencies ended slightly higher
against the U.S. dollar as the won shot up on news of an
emergency global cash infusion to salvage the South Korea
economy.

The won rocketed to 1,400 against the U.S. dollar after
flirting with the sensitive 2,000 level Wednesday.

Dealers said central Bank Indonesia stepped in to sell U.S.
dollars in the afternoon and mopped up rupiah in an apparent bid
to boost greenback supply thinning due to huge demand from local
corporates, dealers said.

The intervention took place when the U.S. dollar was trading
at 5,600 rupiah, a dealer at a U.S. investment house said.

The rupiah closed at 5,150/5,250 against the opening of
5,800/5,900.

"It could be one way of providing dollars to the market at a
time when supply was drying up due to year-end pent up corporate
demand," Sani Hamid, analyst with U.S. research house Standard
and Poor's MMS in Singapore, said.

A dealer with a European bank said the intervention was
effective in a thin market due to the year-end holidays. "You pay
less to beef up the rupiah in a thin market, especially when the
big boys are not around," he said.

The Indonesian rupiah on Wednesday had plunged an incredible
15 percent to a new historic low of 6,200 against the US dollar
as local corporates scrambled to buy the greenback to repay
mounting foreign debt.

Most Asian markets were closed Thursday for Christmas.

Analysts warned the worst of the regional exchange-rate
turmoil was not over yet because of alarming debt levels in the
region, and attributed yesterday's respite to year-end market
lethargy.

Jimmy Koh, regional economist with British financial house
IDEA, said the debt problem in Indonesia was getting worse and
"the possibility of foreigners unlikely to roll over the debts is
real."

"We do not rule out a possible recession in Indonesia next
year," Koh said.

Apart from South Korea and Indonesia, Thailand is also saddled
with debts, largely private debt of more that $70 billion.

The debt ratings of the three economies were cut Monday to
"junk" status by U.S. credit assessor Moody's Investors Service.

The won received a boost on news at midnight on Christmas eve
that the International Monetary Fund and key industrialized
nations would accelerate disbursement of $10 billion from a
bailout package by early January.

Seoul agreed to faster opening up of its capital markets in
return for the global aid to meet the avalanche of maturing
short-term debts that had threatened to swamp the country.

The won ended trading at 1,498.00 against the dollar after
peaking at 1, 400.

"I think it is certainly premature to say they are out of the
woods but at least the crisis mood will calm down a bit from the
panic that prevailed beginning of the week which took the won
just short of 2,000," said David Cohen, another analyst with MMS.

Cohen said that despite the IMF disbursement of funds, "there
is still going to be a real threat of individual companies
defaulting on some debts that will certainly be a lingering
concern of the market."

Cash-starved South Korea is scrambling to convince foreign
bankers to roll over its 100 billion dollar short-term debt in a
bid to prevent a collapse of its financial system.

The Malaysian ringgit was slightly lower yesterday at 3.8750
against the U.S. dollar from 3.8650 on Wednesday while the Thai
baht offshore rose to 45.50 from 46.00.

The Singapore dollar was at 1.6700 against the greenback from
Wednesday's close of 1.6728 while the Taiwan dollar was little
changed at 32.66 from 32. 63.