Rupiah sold down in thin holiday market

Rupiah sold down in thin holiday market

HONG KONG (Dow Jones): Selling pressure pushed both the Indonesian rupiah and the Philippine peso to new lows for the year during Asian trading hours Tuesday.

But in a week scattered with regional holidays, trading in most foreign exchange markets was subdued and volumes relatively thin.

The closure of financial markets in Jakarta didn't relieve the pressure on the rupiah, however, as offshore market players based in Singapore continued to sell down the Indonesian currency.

The rupiah has come under increased pressure over the last week after the International Monetary Fund delayed the disbursement of $400 million in assistance funding originally scheduled for April.

Sentiment worsened further after the government postponed the removal of fuel price subsidies planned for April 1, heightening fears that the pace of economic restructuring is flagging.

Singapore-based dealers reported significant interest from offshore banks to buy dollars against the rupiah Tuesday, despite the illiquidity of the rupiah market with Jakarta closed.

Intraday trading saw the U.S. currency pushed as high as 7,780 rupiah, its highest since mid-October 1999, before profit-taking set in.

Toward the end of trading in Singapore the dollar was quoted at Rp 7,700, up from Rp 7,685 the previous day.

Further interest to take profits is likely to emerge around Rp 7,750, capping the market below Rp 8,000 in the near term, according to dealers.

The Philippine peso also came under pressure Tuesday as the perception that President Estrada's government has lost its policy direction, and as last weekend's rumors of a potential coup attempt continued to be felt in the market.

But fears the central bank would intervene to support the peso capped the dollar at 41.200 pesos, a six-month high.

By the close of trading in Manila, the dollar had retreated to end at 41.150 pesos, up from 41.135 pesos, the previous day.

Elsewhere in Southeast Asia, activity was quiet. With the yen trading sideways through Asian hours there was little to move the Singapore dollar or the Thai baht, said dealers.

Late in the day, the U.S. dollar was quoted against the Singapore currency at S$1.7177, up from S$1.7142 the day before. Resistance at S$1.7200 is likely to cap the U.S. dollar in the short to medium term, said dealers.

Against the baht, the dollar was quoted at 37.790 baht, little changed from 37.780 baht late Monday. Traders say the dollar is unlikely to be pushed above offers in the 37.850 baht to 38.000 baht level.

In North Asia the won traded lower as a sell-off in the local stock market combined with the threat of further intervention following the central bank's dollar purchases Monday lessened market appetite for the South Korean currency.

At the close the dollar was trading against the won at 1,113.40 won, up from 1,112.30 won the day before. The Seoul market is closed for a holiday Wednesday.

Markets in Taipei were closed Tuesday.