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.