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.