Rupiah and peso strengthen sharply against U.S. dollar
Rupiah and peso strengthen sharply against U.S. dollar
SINGAPORE (Dow Jones): The rupiah and the Philippine peso strengthened sharply against the U.S. dollar during Asian trading hours on Monday, providing the only bright spots in an otherwise dull session for regional foreign exchange markets.
After a relatively quiet day on Friday, the rupiah returned to recent form on Monday, see-sawing through an impressively volatile 10 percent range during Asian trading hours, after a local newspaper reported that the Indonesian central bank is contemplating introducing restrictions on rupiah convertibility.
The Philippine peso, meanwhile, rose to its highest level in over three months, buoyed largely by healthy inflows of remittance funds from expatriate Filipinos.
Among other Southeast Asian currencies the Singapore dollar and the Thai baht ended the day little changed, while in North Asian markets both the new Taiwan dollar and the South Korean won ended higher.
In Singapore, the rupiah opened on a soft note as U.S. dollar buying from offshore market participants pushed the U.S. currency up to an intraday high of Rp 8,100 early in Asian trading.
The trend abruptly reversed direction when trading got underway in Jakarta, however, as Indonesian banks entered the market selling dollars heavily and pushing the U.S. currency back down to a low of Rp 7,275.
Traders attributed the sudden sell-off to an Indonesian newspaper report that Bank Indonesia is contemplating the re- introduction of a fixed trading band for the rupiah.
Despite the dollar sales, offshore players largely dismissed the reports as lacking credibility.
"I don't think Bank Indonesia can bring back a trading band so soon after it abandoned the last one," said the same trader, referring to the exchange-rate regime ditched by the central bank in August 1997 at the start of Asia's financial crisis. Since then the rupiah has depreciated by roughly 60 percent against the U.S. dollar.
The Philippine peso also strengthened substantially on Monday, rising by more than 1 percent against the U.S. dollar to close at its highest level since mid-July.
In addition to healthy remittance inflows from Filipinos overseas, which traditionally boost the peso towards the end of the year, analysts also pointed to the expected disbursement early in November of $260 million of International Monetary Fund standby funding, which is also seen supporting the local currency.
At the same time some offshore investors are enthusiastically eying the Philippines' debt and equity markets in anticipation of a rally.
At the close of trading in Manila the U.S. dollar was quoted at 41.625 peso, down from 42.050 at the end of Friday's session.
Elsewhere in Southeast Asia, the U.S. dollar ended nearly flat against the Singapore dollar after a sell-off in the U.S. currency during New York hours Friday was rapidly bought back at the start of Monday's Asian session.
Late in Asia the U.S. dollar was quoted at S$1.6261, just a touch lower than S$1.6275 late on Friday.
The baht was also steady, with the U.S. currency ending Asian hours at 37.58 baht, little changed from 37.60 at Friday's close.
In North Asia, the U.S. currency ended down against the new Taiwan dollar and the won. In Taipei the U.S. dollar closed at NT$32.777, compared with NT$32.898 at the end of the previous session.
In Seoul the U.S. dollar ended the day at 1,313 won, down from 1,316 on Friday.
In Tokyo, the dollar rose against the yen, with strong buying from Japanese institutions, dealers said.
The dollar was trading at 119.00-03 yen in late trading , up from 118.15 yen in New York late Friday but down from 119.12-15 yen here Friday afternoon.