Rupiah rises to four-month high against U.S. dollar

Rupiah rises to four-month high against U.S. dollar

SINGAPORE (Dow Jones): Asian currencies edged higher against
the U.S. dollar on Monday, but trading activity was subdued as
the inflows that lifted regional markets in recent weeks began to
taper off, dealers said.

The Indonesian rupiah continued to attract the most attention
from offshore investors, rising to a four-month high against the
U.S. dollar.

Interest in the Philippine peso was also strong, as buying
pushed the Philippine currency to its highest level in 13 months.

The Thai baht and the Singapore dollar inched higher too,
while in North Asia the South Korean won ended up slightly and
the New Taiwan dollar closed flat.

With Asian stock markets failing to recapture the bullish
flavor of early last week, there was less upward impetus behind
regional currencies than in previous weeks.

"On a net basis we are still seeing inflows into regional
equities, but the momentum is slowing," said Steven Chang,
foreign-exchange manager at State Street Bank in Hong Kong.

Should the yen remain stable, with the U.S. dollar trading
around 120 yen, the level of investment inflows into regional
markets should be sufficient to support the local currencies,
Chang said. But further gains are likely to be modest compared
with the extent of the appreciation in recent weeks, he added,
explaining that Asian-currency investments now carry little or no
risk premium over U.S. dollar yields.

Buying of rupiah by a U.S. investment bank was credited with
driving the Indonesian currency to its highest level so far this
year, as the U.S. dollar was pushed below 7,800 rupiah for the
first time since Dec. 31 in early trading.

The rupiah purchases followed heavy buying of the local
currency by offshore participants Friday, leading some traders to
associate the interest with Friday's sale to foreign investors of
the Indonesian government's $404 million stake in
telecommunications company PT Telkom.

Monday's sales of U.S. dollars for rupiah were short-lived,
however. After the U.S. currency slipped below Rp 7,800, dollar-
buying interest began to emerge from private-sector banks in
Jakarta, according to a trader at a European bank in the
Indonesian capital, placing a floor under the U.S. currency at Rp
7,770.

The remainder of the session saw little price movement. Toward
the end of Asian trading, the U.S. dollar was quoted at Rp 7,780,
down from Rp 7,960 Friday.

Elsewhere in the region, the Philippine peso rose strongly
Monday, climbing to its highest level against the U.S. currency
since April 13, 1998.

At the close, the U.S. dollar was quoted at 37.650 pesos, down
from 37.935 pesos at the end of Friday's session.

The peso's rise came after the Philippine central bank trimmed
a further 12.5 basis points off its key overnight rates - the
13th cut so far this year - driving yields on benchmark 91-day
treasury bills below 10 percent for the first time in two years
at Monday's auction.

Other currencies rose slightly such as the Thai baht to 36.85
from 36.915, and the Singapore dollar to 1.6995 from 1.7010.

The Taiwan dollar was marginally higher at 32.761 from 32.762,
while the South Korean won was at 1,201.02 from 1,202.80.

The yen was rangebound in trade here and closed at 120.50, up
from its finish here last Friday of 120.68 and 120.55 in New
York.

Analysts expect regional currencies to test higher levels
against the greenback but see regional central banks stepping in
to prevent their currencies from appreciating too strongly to
maintain export competitiveness.