Rupiah, baht take a fall as other Asian currencies mixed
Rupiah, baht take a fall as other Asian currencies mixed
SINGAPORE (Dow Jones): Choppy trading in the yen continued to set the tone for dealing in Asia's regional foreign exchange markets Wednesday, leaving Southeast Asian currencies mixed at the end of local hours.
The Singapore dollar finished almost flat on the day, while the Philippine peso edged a touch higher. Both the Indonesian rupiah and the Thai baht fell steeply, however, as market participants sought to exit their positions in the local currencies.
In North Asia the South Korean won and the new Taiwan dollar both ended slightly firmer, supported by a late rally in the yen.
In Jakarta, heavy dollar-buying interest from local banks pushed the rupiah sharply lower from the start of trading, with the U.S. currency breaking up through resistance at Rp 9,000 to peak at Rp 9,100, its highest level since the end of January.
Much of the dollar-buying interest was attributed to position unwinding by two particular Indonesian banks, which one European bank trader in Jakarta estimated had bought up to $100 million over recent days.
With market liquidity evaporating fast as remaining counter-party credit lines are trimmed ahead of this Saturday's expected government announcement of bank closures, the demand for dollars had a disproportionate impact on the rupiah's exchange rate, explained the trader.
It has become very difficult to get out of the market," he said.
Although traders in both Singapore and Jakarta said that Bank Indonesia had sold U.S. dollars through state banks at levels above Rp 9,000, the apparent intervention had little effect.
With the demand for U.S. dollars magnified by the continuing unrest in Ambon, Maluku, and other provinces, and by fears of escalating tensions in the run-up to June's parliamentary elections, many market participants believe the U.S. currency will head higher still over the medium term.
Some traders warn that Bank Indonesia may respond to the rupiah's renewed weakness by tightening domestic liquidity, boosting interest rates in an attempt to support the rupiah.
Despite that, many dealers see the dollar overcoming resistance at Rp 9,200 to rise to levels around 9,400 to 9,500 in the medium term.
The rupiah closed Asian trading at 9,075 against the dollar, down a little from its intraday high, but above Rp 8,975 on Tuesday.
Among other Asian currencies, the Thai baht also fell, in a move traders blamed primarily on U.S. dollar buying to cover short dollar/long baht positions.
Market participants were spooked, they said, by the continuing parliamentary wrangling over Thailand's proposed bankruptcy and foreclosure law.
A Thai newspaper Wednesday quoted Finance Minister Tarrin Nimmanahaeminda as warning that "all hell will break loose" if the bill is passed carrying current senate amendments.
Late in Asia Wednesday, the U.S. dollar had been pushed up to 37.49 baht, well above 37.30 late the day before.
Elsewhere, the Singapore dollar dropped steeply in intraday trading, mirroring a dip in the yen.
A flurry of short covering pushed the U.S. currency to a peak of S$1.7240, although it later drifted off its high to end the Asian day at S$1.7317, little different from S$1.7322 late Tuesday.
On the Philippine Dealing System, the U.S. dollar ended trading against the peso at 39.020 pesos, down from 39.095 at the previous close.
In North Asian markets, central bank intervention helped steer the new Taiwan dollar higher against the U.S. currency, which finished local trading in Taipei at NT$33.120, down from NT$33.136 Tuesday.
Against the Korean won, the U.S. dollar closed at 1,233 won, down from 1,236 the previous day, as the won continued to track the yen's moves.