Rupiah ends lower as market shows disapproval of Cabinet
Rupiah ends lower as market shows disapproval of Cabinet
JAKARTA (Dow Jones): The Indonesian rupiah closed sharply lower on Wednesday as participants dumped the local currency, showing disapproval of the choice of economic ministers in the cabinet reshuffle, dealers said.
Dealers said the appointment of Prijadi Praptosuharso as Finance Minister was "really bad" after Bank Indonesia once vetoed him from becoming head of Bank Rakyat Indonesia.
The appointment of Rizal Ramli as coordinating minister for economics was also met with disappointment by the currency market.
They said they are also concerned that the move to oust Kwik Kian Gie - a close ally of Vice President Megawati Soekarnoputri - out of the cabinet could cause friction between President Abdurrahman Wahid and his deputy.
Kwik had been expected to take the coordinating economic minister post after pressure from Megawati's party to retain him.
"The market considers Rizal Ramli as a dark horse and nobody really knows him and his capabilities are not considered to be as good compared to Kwik," a dealer with a foreign bank said.
The dollar closed at Rp 8,380, up from Rp 8,135 late Tuesday in Asia.
Dealers said they expect the rupiah slide to be capped at Rp 8,400 and to trade in a range of Rp 8,200 to Rp 8,400 on Thursday.
The baht was also among the biggest movers, as the dollar's break below 108 yen in early trading triggered demand for the Thai currency, dealers said.
The dollar was at 40.625 baht, down from 40.735 baht late Tuesday.
Against the yen, the dollar was quoted at 107.40 yen, below 108.17 yen late Tuesday in New York. The dollar was at 108.45 yen late Tuesday in Tokyo.
Dollar selling against the yen was initially triggered by a report that Ichizo Ohara, a senior Liberal Democratic Party member, said Japan's economy is strong enough to endure the dollar at 103 yen.
Market participants also bailed out of their long-dollar positions, which were built up in anticipation of another test of the 110 yen level.
The Singapore dollar was confined to a narrow trading band, as it was caught in a tug-of-war between the strength of the yen and the rupiah on one end, and the shaky euro on the other, dealers said.
Against its Singapore counterpart, the U.S. currency was at S$1.7150, down slightly from S$1.7152 late Tuesday.
The euro was trading at $0.8929, down from $0.8975 late Tuesday in New York.
In Manila, the dollar was at 44.92 pesos, down from Tuesday's close of 44.937 pesos.
Elsewhere, the dollar finished at 1,114.60 won, up from Tuesday's close at 1,114.00 won, as futures-related program selling in blue-chip stocks dented the benchmark stock index by 2.6 percent.
Taiwan financial markets were closed Wednesday due to a severe typhoon which swept through the island.