Rupiah sold down on presidential poll fears

Rupiah sold down on presidential poll fears

HONG KONG (Dow Jones): The foreign exchange market reacted
nervously to Indonesian President B.J. Habibie's selection of
armed forces' chief General Wiranto as his running mate in
Indonesia's presidential election, selling the rupiah down
steeply against the dollar in Asian trading Wednesday.

Activity in other East Asian markets was subdued, with dealers
generally bidding the dollar higher against the regional
currencies, partly on fears of heightened tensions in South Asia
following Tuesday's military coup in Pakistan.

Habibie's choice of Wiranto as his vice presidential candidate
in the Oct. 20 election triggered a flurry of dollar purchases
against the rupiah, largely executed by state-owned banks in
Jakarta, according to dealers in the offshore market.

The volume of dollar bids was easily sufficient to clear out
the offers which had previously capped the U.S. currency at Rp
8,000. With little resistance seen, and most of the news emerging
from Jakarta seen as bad, most traders expected the dollar to
appreciate further in the near term.

"It looks as if Habibie is trying to draw army votes away from
Megawati, who is the market's favorite candidate, so in the short
term people will buy dollars," said Simon Flint, senior currency
strategist at Bank of America in Hong Kong.

Wiranto had been expected to throw his weight behind Megawati
Soekarnoputri, the popular choice for president. He is regarded
as a key power broker, not least because of the 38 seats
controlled by the military in the 700-seat People's Consultative
Assembly which is to elect the president.

By late in Asian trading, the dollar had been bid as high as
Rp 8,080, up over 3 percent from Rp 7,827 late the previous day.

Other regional currencies for the most part took a back seat
to the rupiah, but the Singapore dollar, the Thai baht and the
Philippine peso all ended the day lower against the U.S.
currency.

Although the coup in Pakistan wasn't a major factor
influencing trading, some dealers and analysts did mention fears
of rising tensions between Pakistan and India as a reason to buy
dollars against Asian currencies.

Any escalation in border clashes between the two nuclear
powers is likely to take some of the shine off Asian currencies
in general, as nervous investors trim their exposure to the
region as a whole.

The fall in the Singapore currency was attributed to U.S.
banks, which were said by traders to be buying U.S. dollars
following intervention by the Monetary Authority of Singapore on
Tuesday.

Late on Wednesday, the U.S. dollar was quoted at S$1.6839, up
from S$1.6791 toward the end of Asian trading the day before.

The Thai baht also fell Wednesday, although traders played
down the significance of the decline, saying some profit-taking
is only natural following the baht's 5 percent rise over the last
two weeks.

Late in Asian dealing, the U.S. dollar was quoted against the
baht at 39.65 baht, up from 39.45 baht late the day before.

The Philippine peso also closed a touch lower, with the U.S.
dollar rising to finish the domestic session up at 40.440 pesos
compared with 40.270 pesos Tuesday.

The South Korean won closed unchanged on the day after a round
of U.S. dollar short covering late in the day erased the local
currency's earlier gains.

At the close the U.S. currency was quoted at 1,205.10 won, the
same level as at the previous day's close.

The New Taiwan dollar closed down marginally in line with the
regional trend. At the close, the U.S. dollar was at NT$31.772,
up from NT$31.768 the day before.