Currencies firm, though wary of rupiah

Currencies firm, though wary of rupiah

SINGAPORE (Reuters): Asian currencies regained their footing
in slow trade yesterday, helped by the U.S. dollar's fall against
the yen and relative stability in regional stock markets.

But dealers and analysts expected only a brief reprieve, as
worries about Indonesia and the future of its accord with the
International Monetary Fund continued to dog the market.

The re-election of President Soeharto for a seventh five-year
term came as no surprise, leaving the rupiah wedged in a narrow
500-points range against the dollar as traders awaited details of
cabinet appointments, expected after Wednesday's swearing-in
ceremonies.

"Let's see how it goes with the IMF after Soeharto's election.
If the turmoil in Indonesia is not contained, every currency in
the region will suffer," a senior European bank dealer in Bangkok
said.

Concern that Jakarta would soon announce a currency board
system to stabilize its rupiah weighed on the market and although
the feasibility of the plan remained in doubt, most dealers were
reluctant to commit themselves.

"It looks like their main priority is to stabilize the
currency. They don't seem to care about anything else. But if
they rush it through before the end of the month, it could anger
the IMF," said the head of regional currencies at a European bank
in Singapore.

IMF Managing Director Michel Camdessus expressed frustration
overnight with what he called the "diversion" of the currency
board debate and said a crisis in Indonesia could undermine
efforts to combat financial turmoil in Asia.

The World Bank added to the refrain of bearish comments about
Indonesia, saying it was pessimistic about the economy at present
but hoped the formation of a new government could help in solving
the crisis.

"Financial crises do concentrate the mind and President
Soeharto is one of the great political survivors. With a fresh
mandate and a new government there is at least a possibility for
re-engagement on these issues," said Mark Brown, the bank's vice-
president for external affairs.

Indonesia said it would send a top-level economic delegation
to Washington next week for talks with the United States and the
IMF.

Elsewhere, the Malaysian ringgit extended its early gains,
reaching a high of 3.86 to the dollar, on stop-loss dollar sales
and comments by Finance Minister Anwar Ibrahim.

Dealers said Anwar's statements that the government may revise
its economic projections for 1998 and allow financially insecure
banks to close down reflected welcome realism in the current
climate.

The Singapore dollar tracked its neighbor's rise, but dealers
said it would face resistance at the 1.6350 level to the U.S.
dollar.

The Thai baht gained from offshore dollar sales, but domestic
corporate demand for dollars below the 44.00 baht level thwarted
its rise.

Prime Minister Chuan Leekpai said he was more concerned about
the economic situation in Malaysia than in Indonesia because
Thailand would be more affected by problems in Malaysia.

The Philippine peso firmed above 40.00 to the dollar alongside
its Southeast Asian counterparts, its rise aided by a lack of
corporate dollar demand.

The central bank raised its one-month lending rate to 18.184
percent from 17.93 percent last week after T-bills rates rose in
response to higher February inflation and jitters over the IMF-
Indonesia row.

In north Asia, the Taiwan dollar was lifted by strong selling
of the U.S. dollar through non-deliverable forward trading as the
dollar weakened against the yen.

Taiwan Premier Vincent Siew ordered the finance ministry to
take measures to boost exports, especially to Asian countries,
after weekend news that Taiwan had posted a rare trade deficit
for February.

The South Korean won firmed on stop-loss dollar sales amid
less than expected importer demand for dollars and some exporter
negotiations.

Seoul traders said the central bank was also supplying dollars
following the recent expire of a six-month forward contract to
sell dollars.

They said the Bank of Korea needed to settle slightly more
than $600 million in forward trading this month.

The Hong Kong dollar was firm while forwards extended their
early falls as players squared long positions on a perception the
Hong Kong Monetary Authority was determined to keep rates soft.