Firmer rupiah drives Asian currencies high

Firmer rupiah drives Asian currencies high

SINGAPORE (Dow Jones): Asian currencies were firmer late on
Thursday, basking in the Indonesian rupiah's ascent to a six-week
high.

Snapping out of its recent consolidation against the rupiah,
the dollar skidded through one support level after another late
Thursday, helping extend the recent recovery of the other
Southeast Asian currencies.

"The market got ahead of itself," said Mansoor Mohi-Uddin,
foreign exchange strategist at UBS Warburg. "They've become too
overbearish on these currencies."

In North Asia, the South Korean won and the New Taiwan dollar
also rose on domestic factors.

The Indonesian currency grabbed the limelight as market
participants bailed out of their long dollar positions on
speculation government officials would pressure Indonesian
exporters at a meeting later Thursday to repatriate dollars, in
the government's bid to boost the rupiah.

The market wasn't convinced by the central bank's denial that
this would be on their agenda at their meeting with large
Indonesian exporters at 0900 GMT. Market observers said the
government will probably rely on "moral suasion", rather than
force.

Also boosting sentiment toward the rupiah was a growing
realization that the political risks in Indonesia had been
overstated, following official assurances that President
Abdurrahman Wahid won't be impeached during the critical session
of Indonesia's top legislature which begins next week.

Around 0755 GMT, the dollar was at Rp 8,675, down 2.6 percent
from Rp 8,908 late Wednesday. After breaching the psychological
support levels of Rp 8,800 and Rp 8,700 late in the day, the
dollar fell to as low as Rp 8,610, its weakest level since June
21.

"Offshore speculative players seem to have been squaring loss-
making long (dollar) positions," said Bank of America in a
report, adding that some participants were adding short dollar
positions.

While the dollar will find technical support around Rp 8,450,
it will likely remain buoyed around Rp 8,550 to Rp 8,600 in the
short term, said Mohi-Uddin at UBS Warburg.

Against the Thai baht, the dollar also broke below a critical
support level of 40.800 baht as offshore participants continued
to unwind their long dollar positions, dealers said.

"It's possibly cut-loss selling," a dealer at U.S. bank said.

The dollar was at 40.725 baht, down from 40.925 baht late
Wednesday.

UBS Warburg's Mohi-uddin said the "much, much bigger" support
level of 40.480 baht "should hold".

In the Singapore dollar market, the U.S. currency was at
S$1.7274, down from S$1.7285 late Wednesday. The U.S. dollar had
fallen to as low as S$1.7255 in early trading, but rebounded
partly on bids by local banks, dealers said.

"Some smart guys in the market reckon the Singapore dollar
rally is overdone, a mood supported by news that local banks
(were) bidding on the bottom-side of the (U.S. dollar)," Bank of
America said. "However, our initial feeling is that the recent
shift has been appropriate and the Singapore dollar is roughly in
the center of a new trading range."

The Singapore dollar has rebounded sharply since the Monetary
Authority of Singapore commented a week ago that it was prepared
to allow a modest and gradual appreciation of the Singapore
dollar to ward off imported inflationary pressures.

In Manila, the dollar was at 44.685 pesos, down from
Wednesday's close of 44.810 pesos.

Dollar-selling by foreign investors in the local stock market
shored up the South Korean won, which didn't react to the central
bank's expected decision to leave its one-day call rate unchanged
in August around 5 percent, dealers said.

The dollar finished at 1,114.80 won, down from Wednesday's
close of 1,115.70 won.

The New Taiwan dollar, which is expected to remain pressured
by the sluggish local stock market in the short term, found some
respite when the central bank intervened in the market, dealers
said.

The U.S. currency slipped to NT$31.078 from Wednesday's close
of NT31.086.

While regional currencies will likely consolidate in the next
few trading days, the bias for a stronger dollar remains, since
the U.S. Federal Reserve may raise interest rates as early as
Aug. 22, when it next holds its policy meeting, analysts said.