Rupiah sets weaker tone on Asian monies

Rupiah sets weaker tone on Asian monies

SINGAPORE (Dow Jones): Most Asian currencies slipped late on Tuesday, with the Indonesian rupiah setting a weaker tone amid lingering political doubts.

But stronger-than-expected second-quarter economic growth in the Philippines cushioned the peso's slide, dealers said.

Similarly, news that two of Singapore's largest banking groups are out of the race to own the Hong Kong retail assets of Chase Manhattan helped mitigate the Singapore dollar's losses, keeping it supported around S$1.7200 to the U.S. currency, dealers said.

In North Asia, the South Korean won extended Monday's gains, thanks to continued dollar-selling by exporters and a resumption in speculative trading by local foreign-exchange dealers, dealers said.

The rupiah led the Southeast Asian markets' descent, dealers said.

Just as investors were assessing the political risks in Indonesia - following last week's cabinet reshuffle and a parliamentary probe into financial scandals linked to President Abdurrahman Wahid - the new chief economics minister's reported remarks that he wants to re-negotiate a pact with the International Monetary Fund fueled an early selloff in the rupiah.

Rizal Ramli, a known IMF critic, was quoted by the New York Times as saying he wanted to discuss limiting the IMF's role in Indonesia.

The dollar shot up to as high as Rp 8,345, compared with Rp 8,245 late Monday, but sank back below Rp 8,300 after Rizal denied there were plans to revise the agreement with the IMF.

Dollar-demand from onshore banks around Rp 8,250, however, pushed the U.S. currency back to Rp 8,300 around 0815 GMT, dealers said.

The Philippines' stronger-than-expected economic performance in the second quarter failed to boost the peso, although it kept a rein on the currency's losses, dealers said.

The dollar was at 45.030 pesos late Tuesday, up slightly from Monday's close of 45.020 pesos.

Elsewhere, news that DBS Group Holdings Ltd. and Oversea- Chinese Banking Corp. are out of the race to own the Hong Kong retail assets of Chase Manhattan Bank failed to boost the Singapore dollar, although it softened the blow from the rupiah's weakness, dealers said.

The U.S. currency, which had earlier faced resistance around S$1.7200 on selling in the U.S. dollar by local banks, has probed higher to S$1.7213 around 0845 GMT, up from S$1.7181 late Monday.

The Thai baht wasn't spared from its ailing Southeast Asian peers, as it weakened to 40.875 baht to the dollar from 40.775 baht late Monday.

Bucking the downtrend in Asia, the South Korean won closed at a 16-week high on continued month-end dollar-selling by local exporters, as local dealers ended a halt to speculative trading a day earlier than expected.

The dollar finished at 1,110.10 won, its lowest close since May 10 when it finished at 1,109.10 won. The U.S. currency ended Monday at 1,111.80 won.

The New Taiwan dollar closed little changed as selling in the U.S. currency by the central bank countered the downward pressure from the slumping local stock market, dealers said.

The U.S. dollar ended at NT$31.070, compared with NT$31.072 late Monday.