Rupiah climbs to nine-month high

Rupiah climbs to nine-month high

Alan Yonan Jr., Dow Jones, Singapore

The U.S. dollar continued to struggle against most Asian
currencies Thursday as more evidence emerged that investors are
shifting their money out of the U.S. and into Asia.

South Korean and Taiwan, whose stock markets have become
favorites with foreign investors, saw their currencies climb to
new 17- and 11-month highs, respectively.

The Thai baht, Indonesian rupiah and Singapore dollar climbed
to their highest levels in 15 months, nine months and eight
months, respectively. The Philippine peso also strengthened.

The latest monthly poll of Asian fund managers conducted by
Dow Jones Newswires revealed increasing disenchantment with U.S.
financial assets, due in large part to concerns about poor
corporate earnings.

For the seventh straight month, fund managers said they
preferred non-Japanese Asian stocks over all other global
markets.

The survey squares with recent data issued by UBS Warburg that
showed equity-related capital outflows from the U.S. surged in
mid-May, while the Asia-Pacific region enjoyed its largest
inflows since mid-February.

The news on capital flows isn't surprising, given the bright
economic outlook for most of Asia, said Claudio Piron, currency
strategist at Standard Chartered Bank in Singapore.

"A cyclical recovery is occurring in Asia and we're starting
to see improvement in both exports and domestic activity. At the
same time there is a portfolio diversification by global
investors away from the U.S. and into Asian and European
equities," Piron said.

Capital flows have also helped the yen and euro, both of which
strengthened against the U.S. dollar Thursday.

The won rallied as exporters unloaded U.S. dollars late in the
session despite fears that the government might intervene to cap
the local currency's rise.

The U.S. dollar closed at 1,229.5 won, down from 1,234.3 won
Wednesday. It was the won's strongest finish since Dec. 2000.

Seemingly opaque statements about foreign exchange policy kept
market participants on their toes.

Finance Minister Jeon Yun-churl said Thursday the government
wasn't considering direct intervention in the market, but at the
same time he said it was concerned about the won's recent rise.

Bank of Korea Governor Park Seung said a day earlier that he
wasn't worried about the won's rise.

The baht was carried higher by other regional currencies and
foreign exchange transactions related to foreign inflows into the
local stock market on Wednesday.

Late in Asian trading the U.S. dollar was quoted at 42.455
baht, down from 42.500 baht Wednesday. It was the baht's
strongest performance since February 2001.

The New Taiwan dollar was bolstered by the yen's strength and
large-scale U.S. dollar selling by exporters.

The U.S. dollar ended at NT$34.190, compared with NT$34.239
Wednesday. It was the local currency's best finish since June
2001.

Trading volume of US$1.92 billion nearly matched the record of
$1.95 billion set on May 28, 2001.

Judging from the large turnover, "selling from exporters was
panicky. To my knowledge, many exporters are still lining up to
dump their U.S. dollars," said a dealer with a foreign bank.

The Singapore dollar edged higher in line with the stronger
yen and other regional currencies.

Near the end of Asian trading the U.S. dollar was quoted at
S$1.7890, down from S$1.7935 late Wednesday. The last time the
Singapore dollar was stronger was in October 2001.

Trading was confined to a tight range amid renewed fears of
possible U.S. dollar buying by agent banks of the Monetary
Authority of Singapore, dealers added.

The Indonesian rupiah maintained its composure despite
disappointing news with the canceled auction of the government's
51 percent stake in Bank Niaga.

The U.S. dollar closed at Rp 8,835, down slightly from its
close Wednesday at Rp 8,850. It was the rupiah's strongest finish
since last September.

The government said it canceled the Bank Niaga sale Wednesday
because the bids were too low. However, the cancellation wasn't
viewed as a major disruption to Indonesia's overall debt
rescheduling program.

The peso was underpinned by the firm yen and other regional
currencies.

The U.S. dollar closed at 49.915 pesos on the Philippine
Dealing System, down from the previous session's close of 50.07
pesos.

Traders said the session was largely uneventful, with volume
thinning to $113.25 million from $204 million a day earlier.