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.