Tue, 27 Jan 1998

Intervention props up rupiah to 12,250 against greenback

JAKARTA (JP): The rupiah enjoyed a comparative respite yesterday, closing at 12,250 against the American dollar, amid fears of a possible corporate debt moratorium.

The stable rupiah helped the Jakarta Stock Exchange start the week in bullish mood, with the main price index surging 5.03 percent to close at 473.68.

Currency dealers said spot rupiah touched 15,000 in the morning but strengthened in the afternoon after Bank Indonesia's intervention.

"The central bank sold a limited amount of dollars through state banks, and it proved to be effective in arresting the rupiah's fall," a chief dealer with a local private bank said.

The rupiah ended firmer against the greenback to close at 12,250/13,250 against the opening of 13,500/14,500.

"The intervention was effective because most players were reluctant to take positions for fear of a possible strengthening rupiah on news that Japan will help Indonesia handle its financial crisis," he added.

Japan's Vice Finance Minister for International Affairs Eisuke Sakakibara said Sunday that Japan and the International Monetary Fund planned some sort of measures this week to reverse Indonesia's growing financial crisis.

The dealer said many operators stayed on the sidelines ahead of the Chinese Lunar New Year and Moslem Idul Fitri festivities throughout the region.

Dealers, however, said the main tone remained weak as renewed fears about the massive private sectors debts lingered in the financial market.

"We have not seen any clear indications as to how the government will find a solution to the private corporate debt," a chief dealer said.

Indonesia had total foreign debts of US$140 billion at the end of 1997 with the private sectors accounting for at least $66 billion.

Echoing the rupiah's lethargy, other Asian currencies traded sluggishly yesterday.

The dollar's loss of face against major currencies due to mounting concern about a sex scandal involving U.S. President Bill Clinton also gave bruised Asian currencies some relief.

"The dollar is quite well offered at the moment. It looks like Clinton's helping the Far East currencies a little bit," a senior regional currencies dealer in Singapore told Reuters.

The Thai baht was at 54.65/75 to the dollar onshore against 54.60/75 late on Friday as the market awaited details of talks between Thai Finance Minister Tarrin Nimmanahaeminda and the IMF on a possible review of Bangkok's bail-out terms.

Tarrin said on Friday the IMF and Thailand were in broad agreement on technical changes to the program to make it more flexible, but he declined to detail the changes.

The Malaysian ringgit whipped around in a thin market, receiving a slight boost from the dollar's weakened stance.

The Singapore dollar sagged to 1.7570/1.7620 to the U.S. dollar from 1.7515/65 four hours earlier. Dealers said it was likely to keep to a 1.7450-1.7650 range in the short term.

The market shrugged off comments by Deputy Prime Minister Lee Hsien Loong on Sunday that, barring shocks, Singapore was not expected to slide into a recession.

The Philippine peso recovered from a weak start as corporate demand for the dollar subsided and the market absorbed Friday's news of a central bank plan to increase dollar liquidity by entering into swaps with banks.

In north Asia, the Korean won ended at 1,688 to the dollar from Friday's 1,745 close on exporter dollar sales and hopes of a speedy conclusion to Korean debt talks in New York.

The Taiwan dollar shed early gains to importer dollar demand and finished at T$33.996 against a previous 33.925 close.

The Hong Kong dollar dipped to HK$7.7443/63 per U.S. dollar from Friday's 7.7400/20 close and forwards firmed amid jitters about insolvencies at local brokerage firms.

The following table shows the drop in value of Asian currencies since the crisis began in July. Currency movements are in percentage terms and reflect the local unit's fall against the dollar, not the dollar's rise. (aly)

Currency Current value Move since July 1

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Indonesian Rupiah 12,250.00 -80.15%

Thai Baht 54.65 -52.61%

Korean Won 1,675.00 -46.99%

Malaysian Ringgit 4.53 -44.37%

Philippine Peso 43.05 -38.44%

Taiwan dollar 34.00 -18.37%

Singapore dollar 1.76 -18.73%

Hong Kong dollar 7.74 0.02%