Intervention blocks Taiwan dollar fall

Intervention blocks Taiwan dollar fall

HONG KONG (Dow Jones): Massive intervention by the Taiwanese
central bank blocked a potential free-fall in the New Taiwan
dollar during Asian dealing Monday as market participants
scrambled to sell the local currency following opposition
candidate Chen Shui-bian's victory in Saturday's presidential
election.

Trading in other Asian currencies was relatively quiet, with
most finishing local hours a touch weaker against the U.S. dollar
as markets priced in a rise in U.S. interest rates Tuesday, when
the U.S. Federal Open Market Committee meets.

Dealers in Taipei described across the board demand to buy
U.S. dollars as traders, investors and commercial customers
sought to cover their exposure to the Taiwanese currency, afraid
of heightened tensions with mainland China and domestic political
instability following the weekend's poll.

At US$1.364 billion, trading volumes in the onshore spot
market amounted to over twice the normal daily volume. Despite
the pressure, the Central Bank of China - the Taiwanese central
bank - held firm, selling enough U.S. dollars to cap the U.S.
currency at its intraday high of NT$30.799, and driving the U.S.
dollar down again before the close.

Drawing confidence from the central bank's determination to
stamp out market volatility and prevent the U.S. dollar breaking
up through NT$30.800, most participants believed the storm would
soon blow over.

"This has all happened before," said the treasurer of one
major foreign bank in Taipei. "It's the central bank's policy not
to let the market panic, and I don't think we'll see any
deviation from that any time soon."

At the close of local trading, the U.S. dollar was quoted at
NT$30.791, up from NT$30.766 at Friday's close.

In the offshore market, rates on short-dated U.S. dollar/New
Taiwan dollar non-deliverable forwards briefly spiked to a
premium from a discount.

The Indonesian rupiah closed steady against the U.S. dollar in
slow trade Monday with investors being cautious ahead of the U.S.
Federal Open Market Committee meeting Tuesday.

After trading in a tight range of between Rp 7,435 and Rp
7,460, the dollar closed at Rp 7,448 in Asia, barely changed from
its close of Rp 7,450 Friday.

"There was nothing much going on here," said a dealer at a
Japanese bank, adding that the absence of fresh leads from the
domestic economic front kept investors away from the market.

In other regional markets, the South Korean won closed
moderately lower following U.S. dollar purchases executed by the
state-run Korea Development Bank. At the Seoul close, the dollar
was at 1,118.00 won, compared with 1,117.30 won Friday.

The Singapore dollar slipped a touch in line with the local
stock market as dealers pointed to market jitters over Taiwan and
expectations of higher U.S. interest rates.

Late in Asia, the U.S. dollar was at S$1.7189, up from
S$1.7125 Friday.

Against the Thai baht, the dollar nudged a fraction higher to
38.005 baht, from 37.995 baht Friday, despite strong fourth
quarter gross domestic product data released Monday.

On the Philippine Dealing System, the peso ended the session
little changed, with the dollar at 40.960 pesos, compared with
40.963 pesos at the previous close.