Peso up on Estrada news as rupiah falls
Peso up on Estrada news as rupiah falls
SINGAPORE (Dow Jones): The Philippine peso strengthened modestly on Tuesday in the wake of President Joseph Estrada's impeachment, reflecting the view of investors that a change of leadership would be good for the Philippine economy.
However, Estrada's removal from office is far from guaranteed and the peso will likely remain under pressure as the proceedings drag on, analysts said.
Elsewhere, regional currencies were mixed against the dollar in relatively muted trade. The Indonesian rupiah and New Taiwan dollar weakened, while the Thai baht and South Korean won rose. The Singapore dollar was virtually unchanged.
The dollar closed Asian trading hours at Rp 9,343, up from Monday's close of Rp 9,265.
"Corporates were bidding for the dollar for debt repayment and to pay for imports," a local trader said.
Analysts see debt repayments keeping the dollar above Rp 9,000 for the rest of this year.
Political considerations, including the government's failure to arrest former dictator Soeharto's fugitive son Hutomo Mandala Putra, also known as Tommy, are also giving the dollar a bullish tone.
Indonesia's Supreme Court handed Tommy an 18-month jail sentence earlier this year for corruption, but he went on the run last week to avoid beginning his jail term.
Protesters took to the streets Monday to demand police arrest Tommy.
Meanwhile, Soeharto's ill health - the former president was on oxygen after suffering a "relapse" Monday - is also weighing on sentiment.
Many Indonesians want the government to reopen Soeharto's corruption trial.
Earlier attempts to try Soeharto, who was in power for 32 years until 1998, coincided with a string of bomb attacks linked to supporters of the ex-dictator.
A court dropped the case after Soeharto was judged medically unfit to stand trial, but state prosecutors have appealed for a new trial.
Growing signs of political opposition to President Abdurrahman Wahid, including calls by a group of lawmakers over the weekend for him to resign, added to tension Monday.
Still, most analysts believe Wahid has sufficient support from the powerful Indonesian Democratic Party of Struggle, or PDI-P, to remain in power.
In Manila, the speaker of the House of Representatives announced Estrada's impeachment Monday after financial markets closed, clearing the way for what is expected to be a bitter trial in the Senate.
The peso traded sharply higher Tuesday morning on the impeachment news and rumored dollar selling by the central bank, dealers said.
The dollar opened at 50.300 pesos and fell to 49.650 peso in the first 90 minutes of trading "mostly on impeachment euphoria," said Simon Flint, currency strategist at Bank of America in Singapore.
In North Asia, the dollar closed at 1,136.30 won, down from 1,138.0 won a day earlier.
The New Taiwan dollar edged lower as sentiment toward local stocks remained soft.
Late in the Asian session the U.S. dollar was quoted at S$1.7426, little changed from S$1.7425 late Monday.