Most Asian currencies firmer against U.S. dollar
Most Asian currencies firmer against U.S. dollar
SINGAPORE (AFP): Asian currencies were firmer against the U.S. dollar yesterday, continuing last week's rebound as investors separated regional units from the plight of the Indonesian rupiah.
"The markets have differentiated the currencies' strengths and have separated them from what has been happening to the rupiah," said a currency dealer with a European bank here.
While a contagion effect from any negative development in Indonesia could not be ruled out, "the fear of a worst case scenario in Asia, that of civil unrest in Indonesia, has subsided somewhat," said Eddie Lee, regional economist of Vickers Ballas Investment research.
Among the top gainers in Asian trade here was the Thai baht which rose further to end at 38.65 to the greenback from last Friday's close of 39.41.
"The baht is stronger, still riding the euphoria of (Thai Premier) Chuan Leekpai's government succeeding against a no- confidence motion. We're seeing confidence restored and capital flows are increasing," said another currency dealer with a foreign bank.
The rupiah fell at the open but reversed its direction mid- afternoon to end trade at 9,250 against the greenback, up from 9,400, its close on Friday when it cracked the psychological 10,000-level barrier.
In Jakarta the rupiah closed 8,900.
The rupiah's gain was a knee-jerk reaction to the central Bank Indonesia's increase in interest rates on its certificates, known as SBIs, to mop up excess liquidity, the dealer with a European bank said.
"The markets didn't expect this and they were caught long on dollars," the dealer said.
Another gainer was the Malaysian ringgit, which traded at around 3.5299 from last Friday's close of 3.6650, as investors remained optimistic about economic stimulus measures to be announced by Malaysian Deputy Prime Minister Anwar Ibrahim on Tuesday.
The Philippine peso also rallied to end at 37.69 against the dollar from 37.81 on Friday, and the Singapore dollar was up at 1.5985 from 1.6085.
The South Korean won, boosted by an inflow of foreign funds ended higher at 1,366 from 1,445, and the Taiwan dollar, which opened weak was up slightly at 32.763 from 32.770.
News that the Indonesian finance ministry had canceled a planned five percent tax on foreign exchange purchases, intended to curb speculation on foreign exchange, hardly affected the rupiah's trade against the greenback.
"The markets are basically looking for signs that the IMF will release a much-needed tranche of funds to Indonesia. That's the direction investors are looking at," said the dealer with the European bank.
In continuing talks between the International Monetary Fund (IMF) and Indonesia, the IMF hinted it would relax some demands for economic reforms following increasing social unrest and expressions of concern from Indonesia's neighbors.