Rupiah leads mild rally in regional currencies

Rupiah leads mild rally in regional currencies

SINGAPORE (Dow Jones): The Indonesian rupiah led a mild rally in regional currencies Thursday as the government signed an agreement with the International Monetary Fund that will pave the way for fresh loans to the country.

Regional currencies also got a boost from gains on equities markets across Asia and from positive economic news from Singapore, which reported that non-oil domestic exports in December jumped 25 percent on year.

A lull in the sectarian violence that has rocked the Indonesian resort Island of Lombok and the Malukus, and easing fears that the violence would spread to the populated heartland of Java, has allowed investors to focus more on the positive economic outlook for the region, analysts said.

Confidence in the rupiah also got a lift from U.S. Treasury Secretary Lawrence Summers, who declared that the U.S. stands ready to back economic and political reforms.

"We're increasingly confident about the outlook for the Indonesian market," said Steve Brice, regional treasury economist at Standard Chartered Bank in Singapore.

At 3.30 p.m. (8.30 GMT), the U.S. dollar was at Rp 7,283 rupiah, down from Rp 7,350 late Wednesday.

"We're looking at 7,000 as a target for the dollar-rupiah in the next few days," Brice said.

Indonesia's senior economics minister, Kwik Kian Gie, unveiled a budget plan Thursday that he called a "blueprint for survival" but which analysts said contained few surprises.

In Singapore, strong export figures confirmed that economic growth in the export-led economy is firmly on track. Overall, exports grew by 9.5 percent in 1999 over the previous year, and the government said growth is expected to accelerate to between 11 percent and 13 percent this year.

The U.S. dollar ended the trading day at S$1.6752, down from S$1.6775 late Wednesday. The Singapore currency also was buoyed by a rally in the stock market, which had been taking a beating the past several days, analysts said.

Barring further violence in Indonesia, the Singapore dollar should continue to strengthen, traders said.

"People are bullish on the long-term view for the Sing (Singapore dollar)," one trader said.

The Thai baht was a touch higher but kept within its recent trading range, dealers said. Rumors of major buy orders from a large Thai exporter pushed up the currency, a Singapore-based trader said.

The U.S. dollar ended the day at 37.27 baht, down slightly from 37.41 baht late Wednesday.

Even the Philippine peso, which has been sapped by controversy surrounding President Joseph Estrada, managed to post modest gains. The dollar closed at 40.640 pesos on the Philippine Dealing System, down 5.5 centavos from 40.695 pesos at Wednesday's close.

In other Asian markets, the South Korean won ended higher on afternoon dollar-selling by local banks and overseas players taking their cue from gains in the stock market. The dollar finished at 1,125.50 won, down from Wednesday's close of 1,128.50 won.

Traders said the won was likely to continue posting gains, despite central bank efforts to subdue it.

The New Taiwan dollar gained on the back of inflows into the equity market despite reports of central bank intervention.

Traders said the central bank bought about US$50 million to slow the local currency's rise.

The U.S. dollar ended at NT$30.832, down from NT$30.838 late Wednesday. Continued stock market gains are expected to push up the local currency further still, traders said.