Rupiah inches down over censure

Rupiah inches down over censure

SINGAPORE (Dow Jones): Fading interest in the U.S. dollar following the Federal Reserve's interest rate cut helped most Asian currencies post gains Thursday.

The Indonesian rupiah closed slightly lower Thursday after Indonesian lawmakers voted to censure President Abdurrahman Wahid over his alleged involvement in two financial scandals.

The dollar ended Asian trading at Rp 9,525, up from Rp 9,450 late Wednesday.

Indonesia's Parliament voted 393-4 to censure Abdurrahman, which could form the first stage in impeachment proceedings against the president.

Abdurrahman, more popularly called Gus Dur, denies any wrongdoing, but the market is still nervous that he may be forced from office sometime soon, said Simon Flint at Bank of America in Singapore.

"People are talking about him resigning," he said.

Indonesia's central bank also said Thursday it can't stop offshore banks from setting up their own rupiah clearing system as a way of getting around new foreign exchange rules.

"We can't forbid them to do that, because what we do is to govern banks in Indonesia only," deputy governor Miranda Gultom told reporters.

Foreign banks are mulling a plan to set up their own offshore rupiah clearing system in Singapore after the central bank introduced new laws making it harder for onshore institutions to lend or transfer rupiah offshore.

Those rules helped push the rupiah a touch higher in recent weeks as offshore players cut their long-dollar positions.

The peso slipped after the Philippine central bank announced it would match the U.S. cut in short-term rates.

The dollar closed at 49.160 pesos on the Philippine Dealing System, up from 48.975 pesos a day earlier.

The market's bias for a stronger peso eased after the local monetary authorities decided to reduce the central bank's lending and borrowing rates by 50 basis points. With the latest move, the central bank has cut interest rates by 3.5 percentage points in the past two months, nearly reversing the 4 percentage point hike in October aimed at stabilizing the falling peso.

While the initial market reaction was negative, a dealer at a local bank said it could help the currency over the longer term as it stimulates economic growth.

The Thai baht benefited from the country's improving political picture and foreign funds unwinding their long dollar positions following the U.S. rate cut, dealers said.

Toward the end of Asian trading the dollar was quoted at 42.350 baht, down from 42.505 baht late Wednesday. The dollar had been above the 43.600 level as recently as Jan. 11.

At the close of trading the dollar was quoted at 1,256.7 won, down from 1,259 won Wednesday.

South Korea's main stock index fell 0.9 percent, although foreign investors were heavy net buyers, snapping up 185.8 billion won worth of shares.

Sentiment toward the won also was helped by stronger-than- expected trade data for January. South Korea posted a $323 million trade surplus for the month, surprising most analysts who had expected a much smaller surplus or a deficit.

Foreign stock purchases similarly helped the New Taiwan dollar, lifting the currency to an 11-week high.

The U.S. dollar closed at NT$32.365, down from NT$32.397 Wednesday.

Despite the Taipei bourse's 0.64 percent slide, foreign equity investors continued to send in funds, buying a net NT$2.74 billion worth of shares.

The Singapore dollar gained in tandem with the yen and Thai baht.

Late in Asian dealing the U.S. dollar was quoted at S$1.7400, down from S$1.7430 late Wednesday.