Rupiah hits nine-month high
Rupiah hits nine-month high
Alan Yonan, Dow Jones, Singapore
The dollar advanced against most Asian currencies, drawing
support from its stable performance against the yen and euro.
The dollar's only real challenge came from the Indonesian
rupiah, which strengthened to a fresh nine-month high as
exporters rushed to sell the U.S. currency before it lost even
more of its value.
The Singapore dollar, Thai baht and Philippine peso weakened.
The South Korean won was unchanged, while the New Taiwan dollar
edged higher.
The dollar slipped toward the Rp 8,500 level after having
crashed through critical support levels of Rp 8,800 and Rp 8,700
in recent weeks.
The Indonesian currency has thoroughly dominated its U.S.
counterpart this year, appreciating by more than 22 percent since
Jan. 1.
"Domestic players think the dollar will weaken further. There
have been some fairly large sell orders from exporters," said
Thio Chin Loo, currency strategist at BNP Paribas in Singapore.
State banks reportedly took advantage of the momentum against
the dollar to sell the currency and pushed it even lower.
Late in Asia the dollar was quoted at Rp 8,540 down from Rp
8,700 late Friday. It was the rupiah's best showing since last
August.
Sentiment toward Indonesian stocks and the rupiah has been on
the upswing lately because of the country's debt restructuring
efforts and improving economic growth potential.
The International Monetary Fund in late April bolstered
investor confidence in Indonesia when it released the latest
tranche of it's US$4.6 billion loan program aimed at rebuilding
the country's economy. The IMF decision capped a string of
successes, including the government's sale of its majority stake
in Bank Central Asia, and the Paris Club's rescheduling of $5.4
billion in Indonesian debt.
"The rupiah has benefited from a confluence of factors and a
level of Rp 8,000 (per dollar) is achievable," Thio said.
However, not all news coming out of Indonesia has been good.
The government last week called off the auction of its stake in
Bank Niaga because the bids it received were too low.
Some analysts say the sale of government-owned assets will
become increasingly difficult going forward because the quality
of remaining assets is not as good.
While it's difficult to argue with overriding market
sentiment, "we would maintain that the risk reward at these
levels is biased against the rupiah -- and that the market
seriously risks overshooting in its optimism on Indonesian
assets," Bank of America said in a note to clients.
The dollar traded in a narrow range against the yen Monday as
fears of more intervention by Japanese monetary authorities
caused traders to think twice about buying yen.
The Bank of Japan intervened three times in the last two weeks
on the behalf of the Ministry of Finance to prop up the flagging
dollar.
Near the end of Asian trading the dollar was quoted at 124.33
yen, compared with 124.32 yen late Friday in New York. The euro
was at $0.9315, compared with $0.9318 late Friday in New York.
The dollar closed at 50.360 pesos on the Philippine Dealing
System, up from 50.250 pesos Friday.
"Whenever there's an external conflict, the market tends to be
bearish on the peso as the dollar is often considered a safe
haven," a dealer said.
The Singapore dollar weakened slightly in lackluster trade.
Late in Asia the U.S. dollar was at S$1.7878, up from S$1.7837
late Friday.
The South Korean won ended unchanged as exporters' dollar
sales neutralized the impact from the yen, which was weaker for
most of the day, said market participants.
The dollar finished at 1,226.3 won, even with Friday's 17-
month closing low.
The New Taiwan dollar ended near a one-year high, although
some central bank intervention limited its gains.
The U.S. dollar ended at NT$34.139, down from Friday's
NT$34.145.