Rupiah in steady rise as other currencies rebound

Rupiah in steady rise as other currencies rebound

SINGAPORE (AFP): The Indonesian rupiah persisted in its steady rise against the U.S. dollar in thin trade yesterday as other Asian currencies led by the Thai baht made up for their losses after a brief sell-off the day before.

Positive though cautious sentiment pushed the rupiah up to 8,375 to the dollar in Jakarta mid-afternoon from 8,700 on Tuesday, as investors assessed comments from officials on talks between Indonesia and the IMF for the release of a second tranche of badly-needed funds to the crisis-stricken country, dealers said.

"The rupiah is drifting higher even in quiet trade the past few days but the market still perceives that Indonesia is reaching a compromise with the IMF," said a dealer with a French bank in Singapore.

Other regional units resumed their ascent against the greenback after briefly being derailed by profit-taking Tuesday, as additional measures to stimulate Malaysia's economy announced by Malaysian Finance Minister Anwar Ibrahim met with mixed reactions from the market.

The Thai baht was firmer at 38.85 to the greenback, off its earlier highs, from Tuesday's close of 39.05, despite concerns that a stronger baht would erode the competitiveness of Thailand's exports.

"Government officials have raised their fears of the inability to export its way out of the recession given its (Thai baht's) strength," ANZ Investment Bank said in a report yesterday, adding that "the market's bias for a strong baht may be overdone."

Thai Finance Minister Tarrin Nimmanahaeminda on Wednesday said that the current levels of the baht will not affect exports.

Other Asian currencies edged up against the dollar in tight ranges from the previous day, such as the Philippine peso at 36.95 from 37.31, and the Singapore dollar at 1.6048 from 1.6069.

The Malaysian ringgit fell to 3.6500 against the greenback from Tuesday's close of 3.6250, the South Korean won slid to 1,380 from 1,375, as did the Taiwan dollar to 32.689 from 32.653.

The recent strengthening of the won at 1,300-won levels and the baht to 38-baht levels to the dollar has had Thai and South Korean finance officials seeking to lower high interest rates imposed as part of separate aid packages worth billions of dollars extended to them by the International Monetary Fund (IMF).

"If the baht continues to stabilize then interest rates could be adjusted and lowered," Tarrin said in Bangkok.

Bank of Korea governor Chon Chol-hwan told reporters in Seoul that the government and the IMF have agreed to start talks to lower market interest rates but "the problem is that the two sides are showing some differences as to whether the current forex rate is stable or not."

A senior U.S. official in Washington on Tuesday said it was too early to tell if the IMF and the Indonesian government would be able to put back on track a stalled economic reform program.

Thailand, South Korea and Indonesia have been the worst hit by the Asian economic crisis and have been each allocated multi- billion dollar aid packages by the IMF to help revive their economies.