Debt sends rupiah to its lowest in 2 years

Debt sends rupiah to its lowest in 2 years

SINGAPORE (Dow Jones): Concerns over the Indonesian government's ability to repay billions of dollars in maturing debt pushed the rupiah to its lowest level in nearly 2 1/2 years Monday.

The Philippine peso also slumped against the dollar, but most other regional currencies finished Asian trading hours higher.

In Jakarta, local corporations snatched up U.S. dollars on fears that the rupiah could fall even further if the government can't make good on its debts, dealers said.

Steady rupiah selling in the morning lifted the dollar to Rp 9,865 by midday, the U.S. currency's highest level against the Indonesian currency since October 1998 when the rupiah was still under pressure from the Asian financial crisis.

Sentiment toward the rupiah is closely tied to IMF assistance to Indonesia, which has been suspended because of concerns the government is falling behind on promised reforms.

The dollar moved off its intraday highs in afternoon trading as state-run banks entered the market and sold the U.S. currency. Late in Asia the dollar was quoted at Rp 9,840, up from Rp 9,660 late Friday.

"We should see further pressure on the rupiah in March as more debt comes due," Panggabean said.

In North Asia, both the South Korean won and New Taiwan dollar edged higher against the U.S. dollar in lackluster trading.

Against the won the dollar closed at 1,248 won, up slightly from Friday's 1,248.5 won.

The dollar was supported by buying in the non-deliverable forward market late last week, but it edged lower on dollar selling from local exporters, dealers said.

In Taipei, the U.S. dollar finished at NT$32.345, compared to NT$32.351 at the previous close.

Little direction came from the local stock market, which ended 0.2 percent lower Monday, or from the yen, which weakened only slightly against the U.S. dollar, dealers said.

A recent run-up in the Philippine peso, inspired by the country's stabilizing political situation, appears to have peaked. Peso appreciation "seemed to have hit a wall ... with longer-term optimism balanced by weak short-term economic indicators," DBS Bank said in a research report.

The dollar closed at 48.230 pesos on the Philippine Dealing System, up from 48.160 pesos Friday.

The Thai baht strengthened on optimism over Prime Minister Thaksin Shinawatra's plan to promote economic growth and deal with the country's bad debt problem.

Late in Asian trading the dollar was quoted at 42.920 baht, down from 43.075 baht late Friday.

The Singapore dollar was virtually unchanged with few fresh leads to drive trading. The Finance Ministry last Friday introduced a budget for fiscal 2001 that included a number of tax breaks for individuals and corporations.

The government also said last week that it intended to continue its policy of allowing the local currency to gradually appreciate.

Late in Asia the U.S. dollar was quoted at S$1,7439, compared with S$1.7442 late Friday.