Rupiah falls in Asian trade on news of IMF delayed payment
Rupiah falls in Asian trade on news of IMF delayed payment
HONG KONG (Dow Jones): The rupiah plunged to its lowest level since the beginning of February in Asian trading Wednesday after the International Monetary Fund confirmed it is to delay the payment to Indonesia of US$400 million in assistance funding.
In other regional markets the new Taiwan dollar closed sharply higher, boosted by a surge of last minute buying just ahead of the close of Taipei's trading session. The Korean won also ended up, rallying strongly on foreign buying after opening lower in response to ministerial comments.
In Southeast Asia, the Philippine peso came under pressure while the Singapore dollar and the Thai baht traded sideways for most of the day.
Confirmation that the IMF is to delay April's scheduled handout to Indonesia led to a flurry of rupiah sales in early trading.
Dealers in Singapore said that short term market traders reacted to the news by jumping on the downward trend in the rupiah, initiated in recent days as Indonesian corporations have bought dollars to meet their quarterly debt service obligations.
In the illiquid rupiah market the demand for dollars drove the U.S. currency to an intraday high of Rp 7,640, its highest level since early February.
But with much of the corporate dollar demand now met, the buying rapidly ran out of steam when offers emerged at the Rp 7,650 level, said dealers.
As traders moved to liquidate their speculative long dollar positions established earlier, the U.S. currency retraced its steps, falling to Rp 7,600 late in Asia. Late Tuesday the dollar had been quoted Rp 7,520.
Some traders were comforted by reassurances from Indonesia's Senior Economics Minister Kwik Kian Gie that the delay in the IMF's disbursement was primarily due to "technical reasons" rather than to the Jakarta government's failure to implement key economic reforms.
With Indonesian banks offering to sell the U.S. currency and more long dollar positions still to be closed out, the dollar could easily drop back to Rp 7,500 Thursday, said one trader at a U.S. bank in Singapore.
In other markets, the continued influx of foreign funds into the Taipei stock market coupled with supportive trade flows lifted the New Taiwan dollar to its highest level since the first week of January.
Much of the local currency buying was concentrated in the last 15 minutes of trading, which saw nearly $200 million change hands on the Taipei spot market.
At the close the U.S. dollar was at NT$30.531, down from NT$30.605 the previous day.
Foreign investment flows also boosted the South Korean won Wednesday. The local currency rallied strongly after opening the session down on reports that the Finance Ministry is planning more local currency bond issues to fund foreign exchange market intervention aimed at holding the won down.
The prospect of more intervention failed to support the dollar, however, as the market sold the U.S. currency down to finish at 1,109.40 won, well down from its opening high of 1,114.00 won and below 1,112.20 won at Tuesday's close.
Heavy month-end corporate demand for foreign currency pressured the Philippine peso Tuesday, driving the dollar to an intraday high of 41.045 pesos.
Although the central bank denied that it intervened in the market, traders believed the authorities had applied "moral persuasion" to limit the extent of the U.S. currency's run-up.
By the close the dollar had retreated to 40.995 pesos, compared with 40.948 pesos the previous day.
Against the Singapore dollar the U.S. dollar ended Asian trading at S$1.7156, up slightly from S$1.7145 the day before. Against the baht the dollar was at 37.81 baht, marginally higher than 37.805 baht late Tuesday.