Rupiah leads sell-off amid worsening unrest

Rupiah leads sell-off amid worsening unrest

HONG KONG (Agencies): Escalating violence in Indonesia sparked
a steep sell-off in the rupiah Wednesday, which in turn dragged
other Asian currencies lower.

The Singapore dollar, Thai baht and Philippine peso all ended
Asian trading hours considerably weaker as contagion spread
beyond Indonesia's borders to infect other regional markets.

North Asian currencies were unaffected, but in Seoul the
Korean government's repeated efforts to talk down the won bore
fruit, as the local currency retreated further from the two-year
high it set Monday.

The New Taiwan dollar ended flat in relatively thin trading.

The outbreak of inter-religious strife in the previously
peaceful Indonesian island of Lombok, along with news of violent
demonstrations by dispossessed farmers on Bintan near Singapore,
was blamed for souring sentiment toward the rupiah early in the
session.

Unconfirmed market rumors that the violence had spread to
Jakarta further multiplied the pressure on the Indonesian
currency, and in thin early afternoon dealing the U.S. dollar
broke up through resistance at the Rp 7,300 level to hit an
intraday high of Rp 7,245.

Traders and investors ignored the positive implications of
U.S. Treasury Secretary Lawrence Summers' upcoming visit to
Jakarta Thursday, the expected approval by parliament of
Indonesia's 2000 budget and the signing of a new letter of intent
with the International Monetary Fund which is due to follow.

Instead they focused on the bad news, selling down not just
the rupiah, but other regional currencies.

"Most of the big funds that would move the market would prefer
to be short dollars against the rupiah," said Simon Flint,
regional foreign exchange strategist at Bank of America in
Singapore. But "there's too much going on, too much violence, too
much political uncertainty."

The greenback rose to Rp 7,335 from Tuesday's close of 7,250,
S$1.6770 from 1.6750, NT$30.835 from 30.830, 40.695 pesos from
40.605, 1,134 won from 1,126.50 and 37.45 baht from 37.29.

In Singapore, the euro traded at 1.0123 dollars, up from
Tuesday's closing here of 1.0114, according to Banque Nationale
de Paris. The euro opened trading here Wednesday at 1.0139
dollars.

The dollar fetched 105.87 yen, up from 105.20 a day earlier
here. The greenback opened at 105.73.

ABN AMRO Bank N.V. said the euro's high was 1.0163 dollars
while the greenback's high was 105.80 yen.