Political jitters hit rupiah and peso in Asia
Political jitters hit rupiah and peso in Asia
SINGAPORE (Reuters): Asian currencies snoozed their way through yesterday's session in the absence of the Tokyo market, but the Indonesian rupiah and Philippine peso suffered due to political jitters, dealers said.
Japan's Green Day holiday, the start of the so-called Golden Week of holidays there, made for low volumes even in the major plays like dollar/yen but there was some action, notably for Jakarta and Manila.
"It certainly wasn't the busiest of days but we did see some dollar demand in places, most notably the rupiah and the peso," said one trader at a major European bank in Singapore.
"It's always quiet during Golden Week and it has been quite hectic so most people are happy to take a step back."
Worries about the escalation of anti-government student protests and the next disbursement of IMF cash plagued the rupiah. But dealers said the extremely tight monetary stance of the Indonesian government -- overnight money was changing hands above 45 percent on Wednesday -- would slow its decline.
The rupiah slipped again after rating agency Standard & Poor's Corp. said it was concerned about the pace of banking sector reform in Indonesia.
The beleaguered currency finished around the 8,130 per dollar level after closing on Tuesday around 8,000.
The Philippine peso fell above the key 40 per dollar level from around 39.70 on Tuesday, remaining weak due to anxiety about the May 11 presidential election.
The peso shrugged aside central bank interest rate rises, and overseas players were likely to be bidding for dollars right up to election day.
The Thai baht held on to its gains at around 38.58 per dollar and dealers said a test of the 38 might be on the cards amid some cross buying of the baht against the ringgit and Singapore dollar.
Dealers cited news Singapore Airlines had expressed interest in buying a stake in Thai Airways as a possible factor behind the baht/Sing dollar buying.
The Thai cabinet approved in principle government plans to issue up to $5.0 billion of bonds in the foreign market in an effort to alleviate the domestic liquidity crunch.
Liquidity has dried up as the Financial Institutions Development Fund (FIDF), which was set up to bail out Thailand's troubled financial institutions, borrowed heavily in the short- term note market.
But some dealers were beginning to see signs of strain in the baht's recent bullish performance and said the squeeze had created a lot of air under the currency.
"The Bank of Thailand has been issuing a lot of paper and the baht is artificially strong. I don't know how long the funds will stay in the country," a European bank dealer in Singapore said.
The Indian rupee weakened in the forward dollar market after the Reserve Bank cut its key bank rate to 9 percent from 10 percent, as part of its credit and monetary policy for the first half of fiscal 1998/99.
The Australian dollar rallied from three-and-a-half month lows of around $0.6430, following news of inflation data, which economists said did not increase the chances of an interest rate cut.
The Malaysian ringgit benefited from offshore interest, but dealers said the 3.75 level was proving to be a barrier to further rises.
The South Korean won remained firm after news of a current account surplus was countered by a 10.1 percent year-on-year drop in industrial output for March.
The current account surplus of $3.70 billion in March compared with a $1.81 billion deficit the year before, but analysts noted that imports in March slumped 36.3 percent while exports rose just 3.3 percent.