Regional currencies up late, rupiah hits two-month high
Regional currencies up late, rupiah hits two-month high
SINGAPORE (Dow Jones): Asian currencies were higher late Thursday, with the Indonesian rupiah staging one of its strongest performances in recent weeks and elevating its Southeast Asian counterparts.
The dollar's retreat against the Japanese yen, fueled by heightened speculation the Bank of Japan will end its zero- interest-rate policy Friday, had also provided some support to the Asian currency market, dealers said.
In late trading, the rupiah surged 3 percent to a two-month high of Rp 8,350 to the dollar, from Rp 8,625 late Wednesday.
President Abdurrahman Wahid's move to delegate management of day-to-day operations to Vice President Megawati Soekarnoputri has taken some sting out of his critics. The move was aimed at appeasing a hostile Indonesian parliament that has been eroding his power base.
This prompted investors, who were bracing for some scathing attacks against the president during the ongoing People's Consultative Assembly meeting, to unload their dollar positions against the rupiah, despite reservations about Megawati's governing abilities, dealers said.
"The apparent change of heart the president has had with regard to how he is willing to deal with his coalition partners is positive," said Steve Brice, a currency strategist at Standard Chartered Bank.
"Meanwhile, it also suggests that the new cabinet will have representatives from the major parties, which would again be positive for government cohesion," he added.
Brice said he expects the dollar to "form a base" around Rp 8,200 to Rp 8,250 in the short term, although the bank's year-end target "is still for a higher dollar".
Also supporting the rupiah are reports a campaign is underway in Indonesia's parliament to amend laws in order to close down the central bank and replace it with currency board to stabilize the local currency, dealers said.
Against the Japanese yen, the U.S. dollar had earlier in the day hit a fresh three-week low of Y107.45 on heightened speculation that the Bank of Japan will end its 18-month-old zero-interest-rate policy Friday.
The other major gainer in Southeast Asia was the Singapore dollar. It hit a three-month high against the U.S. currency.
The U.S. dollar was at S$1.7138, down from S$1.7215 late Wednesday. The U.S. currency had briefly edged slightly below psychological support at S$1.7100 earlier in the day. This was the U.S. dollar's weakest performance since May 2.
Currency watchers warned that the Monetary of Singapore may be uncomfortable by the Singapore dollar's sharp appreciation in the past few weeks.
Besides riding on the strength of the Indonesian and Japanese currencies, the Singapore dollar was also boosted by favorable domestic economic data and the de facto central bank's reiteration it was prepared to allow for a modest and gradual appreciation of the Singapore currency in the next 12 months, dealers said.
In the baht market, the dollar was at 40.725 baht, down from 40.955 baht late Wednesday.
The baht's vigor boosted the Philippine peso, which strengthened to 44.725 pesos to the dollar at one point, compared with Wednesday's close of 44.819 pesos.
But concerns over some fluctuations in the central bank's gross international reserves had caused the peso to retreat, dealers said. The dollar closed at 44.870 pesos on the Philippine Dealing System.
The fluctuations in the level of the central bank's reserves - from around $15.4 billion in June, to $14.8 billion in July, to the most recent $15.5 billion - prompted many banks to maintain long dollar positions, dealers said.
The region's firmer undertone also helped lift the New Taiwan dollar to its highest level this month, dealers said.
The U.S. dollar finished at NT$31.069, down from NT$31.088 Wednesday.
In South Korea, a 2.7 percent surge on the stock market propped up the won. The dollar finished at 1,114.50 won, down from Wednesday's close of 1,115 won.