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.