Rupiah drops to fresh low at year-end

JAKARTA (JP): Bank Indonesia announced on Friday its year-end buy/sell rate of the rupiah against the U.S. dollar at Rp 9,095/10,095 as the local unit dropped to a fresh low of Rp 9,575 in offshore markets.

The domestic financial markets have been closed for the year- end holidays since early this week, but Bank Indonesia announced the buy/sell rate to help the public and business sector conduct transactions.

The central bank's mid-exchange rate for the rupiah was set at Rp 9,595 per dollar.

The previous buy/sell rate of the central bank was Rp 8,880/9,880 on Dec. 22, the last trading day of the local currency market this year.

The Jakarta financial markets will resume activity on Jan. 2.

The rupiah has been hovering at around Rp 9,500 over the past few months due to a combination of domestic political instability and external factors. This level represents a drop of more than 26 percent from the level prevailing in early 2000.

A series of bombings on Christmas Eve in and near churches in Jakarta and several other towns sent the rupiah to a fresh low at the year end.

Meanwhile, Bank Indonesia announced that its foreign exchange reserves in the third week of this month had increased by US$387 million to $29.28 billion from the level in the previous week.

The central bank said in a press statement that the increase was due primarily to higher oil revenue.

Dow Jones Newswires reported that most Asian currencies closed lower against the U.S. dollar Friday, capping a woeful year that saw values across the region eroded by a host of factors ranging from political turmoil to declining electronics exports.

The only currency that closed higher on Friday was the New Taiwan dollar, which benefited from moves by the central bank to stabilize the foreign exchange rate.

For the year, the degree of damage suffered by Asian currencies varied widely, ranging from the Singapore dollar's 3.9 percent decline to the Indonesian rupiah's 26.8 percent plunge.

The South Korean won and New Taiwan dollar, which rallied sharply in the first half of the year on the strength of spectacular economic growth, saw their fortunes fade in recent months partly due to a slowing of U.S. demand for their high technology exports.

The won declined on Friday for the seventh time in the last eight trading sessions, finishing 10 percent off its year-ago level. The dollar closed Friday at 1,264.5 won, up from 1,253 won a day earlier.

In addition to slowing export growth, the won has lost favor with investors due to concerns over whether the government will be able to push through corporate and financial sector reforms.

Labor unions have been fighting such reform efforts because the mergers and closures that are part of the process have often resulted in job losses.

The New Taiwan dollar was bolstered by the central bank's move to raise the reserve requirement ratio on foreign currency deposits to 10 percent from 5 percent.

The announcement, made Thursday, is expected to help narrow the interest rate differential between the Taiwan dollar and the U.S. dollar. Light intervention by the central bank also helped the local currency, dealers said.

At the close of trading, the U.S. dollar was quoted at NT$33.079, down from NT$33.159 late Thursday. The New Taiwan dollar fared better than most other Asian currencies in 2000, falling just 5.4% against the U.S. dollar.

The Singapore dollar finished slightly lower in a tight range ahead of the long holiday weekend. Markets in Singapore and most of the rest of Asia will be closed Monday for New Year's Day.

Late in Asia, the U.S. dollar was quoted at S$1.7334, up from S$1.7314 late Thursday.

The Singapore dollar began the year at S$1.6655 per U.S. dollar before the Monetary Authority of Singapore stepped in to slow the local currency's appreciation for reasons of export competitiveness. The U.S. dollar then rose gradually, hitting its high for the year of S$1.7620 in late November.

The Thai baht continued to be buffeted by political uncertainty heading into the upcoming general elections next week.

Late in Asian trading, the dollar was quoted at 43.250 baht, up from 43.065 baht late Thursday. Dealer said dollar selling by exporters helped limit the baht's decline. The baht finished 13.5 percent lower than its year-ago level.

The Philippine peso was pressured by demand for the U.S. currency from some companies and banks.

The dollar closed at 50.010 pesos on the Philippine Dealing System, up from 49.870 pesos Thursday. The dollar hit an intraday high of 50.050 pesos and averaged 49.986 pesos.

The peso lost 19.6 percent of its value on the year as sentiment was dented by rising U.S. interest rates, a domestic political crisis and higher world crude oil prices. (rei)