Rupiah plunges on quarterly dollar demand in Asian trade

Rupiah plunges on quarterly dollar demand in Asian trade

HONG KONG (Dow Jones): The Indonesian rupiah fell to its
lowest since the beginning of the month during Asian trading
hours Tuesday, while the New Taiwan dollar rose to hit its
highest level in six weeks.

Markets elsewhere in the region were largely range-bound with
trading volumes generally thin.

The fall in the rupiah was blamed largely on demand for the
U.S. currency from Indonesian corporations hastening to acquire
sufficient dollars to meet their quarterly debt service
obligations, due at the end of the month.

The treasurer of one foreign bank in Jakarta described how
corporate customers had delayed their dollar purchases in the
hope they would get better levels should the local currency
receive a boost from dollar inflows derived from the sale last
week of a US$506 million stake in Indonesian carmaker PT Astra
International.

But as it became clear that Astra's vendor, the Indonesian
Bank Restructuring Agency, was in no hurry to convert the dollars
it received for the sale, clients were forced to rush to get
their hands on U.S. dollars in illiquid market conditions.

The rupiah's fall was exacerbated by reports that the
International Monetary Fund might delay its $400 million
disbursement to Indonesia planned for April.

Dollar demand pushed the U.S. currency up through resistance
at Rp 7,500 to hit Rp 7,520 toward the end of Asian dealing, up
from Rp 7,485 the previous day.

Although most analysts agree that the rupiah remains deeply
undervalued, few are prepared to predict with any assurance that
the currency will appreciate over the second quarter of the year.

Depending on changes in Indonesia's political and macro-
economic outlook, said one trader, the dollar could end the next
three months anywhere between Rp 7,000 and Rp 7,800.

In other regional markets, foreign investment inflows
continued to lift the New Taiwan dollar, which rose to its
highest level since mid-February in intraday trading.

By the close of dealing in Taipei, central bank dollar
purchases had driven the U.S. currency up again from its earlier
low of NT$30.595 to close at NT$30.605, down from NT$30.627 at
the previous day's close.

The South Korean won remained range-bound, with government-
backed dollar purchases by state-run banks and verbal
intervention by the finance ministry helping to prop up the U.S.
dollar despite heavy month-end exporter sales.

At the close, the dollar was quoted at 1,112.20 won, compared
with 1,112.10 won the day before.

In Southeast Asia, the Singapore dollar ended local dealing
hours little changed against the U.S. dollar. Late in Asia, the
U.S. currency was at S$1.7145, down a touch from S$1.7152 the
previous day.

The Thai baht eased lower in thin trade, with the dollar
rising on quarterly debt service demand to 37.805 baht, up from
37.780 baht late Monday.

The Philippine peso inched higher, as the dollar slipped to
end the session at 40.948 pesos, down from 40.955 pesos the day
before.