Intervention props up rupiah

Intervention props up rupiah

SINGAPORE (Agencies): The Japanese and Indonesian central
banks and the Monetary Authority of Singapore (MAS) intervened in
the foreign exchange market yesterday for the second time in four
days to shore up the Indonesian rupiah, an MAS spokesman said.

Dealers said the three authorities soaked up the U.S. dollar
at the 3,330 rupiah level. The rupiah ended Asian trading at
3,285 to the greenback.

"The intervention took the market by surprise but was a timely
move because the rupiah was weakening a little today," said Andy
Tan, general manager of U.S. research house MMS in Singapore.

Dealers said regional currencies reversed track after the
Indonesian rupiah jumped to around 3,260 to the dollar from its
lows of 3,330 in afternoon trade.

Dealers were unsure of the amount of the interventions, but
they said the market remained on edge for further such moves amid
vague rumors that Malaysia and Brunei had also been involved in
the operation.

"It was kind of a sudden move. One minute dollar/rupiah was at
3,340, the next minute it was at 3,260...when the central banks
hit the market, the next move was very fast," said Ishak Ismail,
market intelligence analyst at I.D.E.A.

"Normally, Bank Indonesia comes in excess of $80-$100 million.
But the MAS could have intervened in a bigger amount because the
Singapore market is large," he said.

On Monday, Singapore Finance Minister Richard Hu and Japanese
Finance Hiroshi Mitsuzuka said the day's intervention was aimed
at correcting what they called the excessive depreciation of the
rupiah and they would act again if needed.

Traders estimated the three central banks sold between $300
million and $500 million on Monday.

"There are dollar bids coming in around 3,270/80, but it
depends on their intentions. If they want to really push the
dollar lower, they could come in again," a U.S. bank dealer in
Singapore said.

The Malaysian ringgit was also near its day highs at 3.2950/50
to the dollar against 3.3200/300 earlier.

Dealers said Bank Negara's agent banks were selling dollars
for ringgit, sparking speculation the central bank was taking
advantage of the dollar's downturn against regional currencies to
shore up the Malaysian currency.

The ringgit had weakened earlier on news Kuala Lumpur had
approved a start next year to work on a 10 billion ringgit
landbridge with Thailand, raising questions about Malaysia's
commitment to cutting its current account deficit.

The Singapore dollar popped above 1.5700 to the U.S. dollar on
rumors oil-rich Brunei was selling U.S. dollars above that level.
But it slid back to 1.5720/40 by 1030 GMT, little changed from
its midday levels.

Even the Thai baht firmed to 38.70/39.00 per dollar onshore
but remained weak offshore at 39.30/60 as players awaited the
outcome of talks between political parties to choose a successor
to outgoing Prime Minister Chavalit Yongchaiyudh.

The Philippine peso ended weak at 34.830 to the dollar against
Wednesday's 34.74 close as sentiment soured after the Supreme
Court declared oil deregulation unconstitutional.

The Korean won ended weak at 975.00 to the dollar against
Wednesday's 969.7, despite repeated dollar sales by the central
bank and reassurances by officials.

The central bank's failure to defend the 970.00 won level,
previously a trigger-point for intervention, earlier sparked
rumors overseas of an impending devaluation, causing the won to
weaken in the non-deliverable forwards market.

But an official at the Bank of Korea strongly denied the
rumors, saying the central bank's "will to stabilize the foreign
exchange market is as firm as ever".

A senior Finance Ministry official also denied talk that South
Korea would seek emergency loans from the International Monetary
Fund (IMF).

The Hong Kong dollar was steady at 7.7315/25 per U.S. dollar,
paring its early gains, but dealers said fears of another
speculative attack on the currency were mounting as forwards
firmed, pushing interest rates up.

The Taiwan dollar ended lower at T$30.700 from Wednesday's
T$30.451 close, under pressure from the U.S. dollar's overnight
surge to six-month highs against the yen.

Fund -- Page 10

Thailand, IMF -- Page 12