Falling rupiah, peso lead slide in regional markets
Falling rupiah, peso lead slide in regional markets
SINGAPORE (Dow Jones): Investors expressed a general distaste
for Asian currencies Monday, with the Indonesian rupiah and
Philippine peso bearing the brunt of the selloff.
Offshore selling of the rupiah was sparked by President
Abdurrahman Wahid's comments over the weekend that he plans to
crack down on legislators suspected of fomenting unrest in
Indonesia, dealers said.
When markets opened Monday morning the rupiah immediately
began declining against the U.S. dollar. By the end of the
trading day the dollar had climbed to Rp 8,940, up from Rp 8,753
late Friday and the highest level in nearly 10 months.
Wahid's comments highlight the stress being placed on
Indonesia's political system as Wahid attempts to restore
economic growth and prevent separatist violence from tearing the
country apart.
Cabinet Secretary Marsillam Simandjuntak, expanding on Wahid's
comments, said Monday the president has suspended parliamentary
immunity for at least 10 legislators being investigated.
He wouldn't say what the politicians were being investigated
for, but there was speculation that Wahid's political rivals and
critics were among those being investigated.
"What's happening to the rupiah has to do with the fact that
Wahid is going after the legislators," said Vincent Low, currency
strategist at Merrill Lynch in Singapore.
"It looks like there may be a standoff with parliament and
that is causing concerns," he said.
The Philippine peso, under pressure on a number of fronts,
fell to a 21-month low of 43.580 per dollar during intraday
trading before staging a modest recovery in late trading. The
dollar closed at 43.560 pesos, up from 43.230 pesos late Friday.
Traders attributed the peso's decline to a host of factors,
including a regional bias in favor of the dollar, low local
interest rates, budget deficit concerns and rising oil prices.
Central bank governor Rafael Buenaventura went on television
as the peso was falling and said he wasn't overly concerned about
the currency's decline.
"It's still at a comfortable level at the moment," he said,
adding that the peso's level should be "market determined."
He said the central bank would only intervene to head off
speculative activity, which didn't appear to be occurring.
The U.S. dollar gained some ground against the Singapore
currency, but remained below levels that would cause concern to
local monetary authorities, dealers said.
The Monetary Authority of Singapore was rumored to have
intervened to support the currency late last week when the U.S.
dollar rose to S$1.7380, its highest level in more than a year.
Near the end of trading Monday, the U.S. dollar was quoted at
S$1.7315, up from S$1.7271 late Friday.
"The current level shouldn't unduly alarm authorities," Low
said.
The Thai baht also came under pressure as players took long-
dollar positions amid declines in other regional currencies.
Offshore banks sold dollars against the baht, pushing the U.S.
currency to 39.362 baht at the close, up from 39.220 baht late
Friday.
The dollar could move to test its year-high of 39.470 baht
against the baht Tuesday, one trader said.
The New Taiwan dollar came under pressure amid weakness in the
yen.
The U.S. dollar closed at NT$30.812, up from NT$30.794 late
Friday.
The New Taiwan dollar opened higher, but lost momentum in the
afternoon following a weaker yen. The Taiwan currency often
tracks the yen because Taiwan competes directly with the Japan
export market.
The South Korean won was the sole gainer among the Asian
currencies, moving higher following the release of stronger-than-
expected trade data for June.
The dollar finished at 1,113.80 won, down from Friday's close
of 1,115.0 won.