Regional currencies higher as rupiah sets bullish tone
Regional currencies higher as rupiah sets bullish tone
SINGAPORE (Dow Jones): The Indonesian rupiah strengthened Monday on expectations of a successful cabinet reshuffle later this week, setting a bullish tone for other regional currencies, which were higher late.
The upswing investor sentiment toward the rupiah is the latest twist for the currency, which has been bounced around during President Abdurrahman Wahid's struggle to gain credibility for his 10-month-old administration.
The rupiah strength spilled over to the Thai baht, Singapore dollar and Philippine peso, while a stronger yen helped bolster the New Taiwan dollar and South Korean won, dealers said.
Demand for the rupiah pushed the currency to its highest level against the U.S. dollar in more than three months Monday. Dealers said Indonesian corporates took advantage of the stable trading conditions to stock up on the local currency, perhaps in preparation to repay rupiah-denominated debt.
The rupiah at one point strengthened to a level of 8,204 to the dollar, its best performance since May 11. The U.S. dollar regained some ground and in late trading was quoted at Rp 8,219, down from Rp 8,335 late Friday.
"At this point, absence of any serious bad news is actually good news for the rupiah," a dealer at an Asian bank said.
Gus Dur, as the Indonesian President more popularly called, as part of an upcoming cabinet reshuffle, will issue a presidential decree empowering Vice President Megawati Soekarnoputri to take a more active role in government, a senior cabinet minister said on Monday. The move will make Megawati, a member of the opposition party, chairwoman of the country's weekly cabinet meetings.
Gus Dur is to unveil a new cabinet later this week, most likely on Thursday, which is expected to include a number of senior lawmakers from Megawati's Indonesian Democratic Party of Struggle.
Trading in most Asian currencies was subdued, with movements confined to a fairly narrow range ahead of Tuesday's Federal Open Market Committee meeting in Washington, a dealer at a European bank said.
"No one is expecting the Fed to raise short-term interest rates, but people will generally want to hold their positions just in case," he said.
The firm base set by the rupiah inspired offshore players with profit-taking in mind to sell dollars against the baht, dealers said.
Late in Asia, the dollar was quoted at 40.855 baht, down from 40.975 baht.
The Singapore dollar strengthened in the opening hours of trading and remained in a tight range of S$1.7150 to S$1.7170 to the U.S. dollar for the remainder of the day.
Near the end of Asia trading, the U.S. dollar was quoted at s$1.7166, down from S1.7208 late Friday.
The Philippine peso ended marginally higher in range-bound trading. The dollar was quoted at 44.960 pesos, down from 44.985 baht to Friday's close.
The pair remained in a range of 44.930 pesos to 44.960 pesos throughout the day. Volume was $31 million, compared with $105 million Friday.
The won took advantage of yen strength and foreign inflows for stock purchases to finish higher.
The dollar closed at 1,114.50 won, down from Friday's close of 1,115.10 won. The same factors combined to lift the New Taiwan dollar.
The U.S. dollar finished at NT$31.069, compared with the previous close of NT$31.079.
Against the yen, the U.S. currency was trading at Y107.90, compared with Y108.38 Friday in New York.