Rupiah, Taiwan Dollar Strengthen: Asian Currencies

Rupiah, Taiwan Dollar Strengthen: Asian Currencies

Bloomberg
Jakarta

The Indonesian rupiah rose for a second day after a group that
included the Singapore government's investment arm won its bid
for a 51 percent stake in PT Bank Internasional Indonesia.

Indonesia's auction of the country's sixth-largest bank and
the proposed sale of two other lenders boosted expectations of
increased demand for the rupiah. The Indonesian bank rescue
agency declined to say how much the group will pay for the stake.

The rupiah climbed 0.5 percent to 8,498 against the dollar
at 3:45 p.m. Jakarta time, bringing gains this year to 5.4
percent.

The Singapore dollar, little changed at S$1.7341, may weaken.
The successful bid, made by Singapore's Temasek Holdings Pte. and
Kookmin Bank, South Korea's biggest lender by assets, spurred
speculation of sales of Singapore dollars to buy rupiah to
fulfill the transaction.

Purchase of "assets in other countries will slightly dampen"
the Singapore dollar, Widjaja said.

Indonesia is selling Bank Internasional and other assets to
fund its budget deficit, estimated at 34.4 trillion rupiah ($4
billion) this year, and to restore its asset sale program after
scrapping a November sale of PT Bank Lippo because of low bids.

Indonesia is also raising 4.17 trillion rupiah, its biggest
stock sale since November 1995, from the sale of a stake in PT
Bank Rakyat Indonesia, pricing the shares at the top of a range
offered to investors.

Stock Inflow

The Taiwan dollar rose after fund managers abroad yesterday
bought the most stocks in almost two weeks, raising expectations
of more demand for the currency.

Overseas investors purchased a net NT$10 billion ($295
million) of Taiwan's equities, the most since Oct. 17. They
bought a net NT$5.6 billion today.

"The foreign inflow will drive the Taiwan dollar," said
James Yang, chief dealer at the Taipei office of J.P. Morgan
Chase & Co., the fourth-largest trader in the $1.2 trillion a day
currency market, according to Euromoney magazine.

The Taiwan dollar gained 0.1 percent to NT$33.91, according
to Taipei Forex Inc. The currency is up 0.3 percent this week.

In South Korea, the won rose 0.2 percent to 1,176.35,
according to Seoul Money Brokerage Services Ltd., also on demand
for stocks.

International money managers yesterday bought a net $453
million of local stocks, the most since July 8, and today
purchased $33 million more than they sold.

`No Good'

The Philippine peso weakened, ending its two-day gain of 0.5
percent, on a report the House of Representatives won't withdraw
its impeachment of Chief Justice Hilario Davide, raising
political tension and discouraging investors.

The Supreme Court backed out of talks to resolve the
impeachment issue, prompting the House to push ahead with the
censure, the Philippine Star reported, citing House Speaker Jose
de Venecia. The impeachment complaint will be transmitted when
the House reconvenes after a break on Nov. 10, De Venecia
said.

"Going ahead with the impeachment is no good for the
currency," said Irene Cheung, Singapore-based Asian sovereign-
debt and foreign-exchange strategist at ABN Amro Bank, the 10th-
biggest trader in the daily $1.2-trillion currency market,
according to Euromoney magazine. "People are putting a risk
premium onto Philippine" assets.

The peso fell 0.1 percent to 55.30, according to Bankers
Association of the Philippines. The currency rose in the past two
days after the House adjourned, delaying the case against Davide
from moving to trial in the Senate and boosting speculation
lawmakers would have more time to resolve the issue.

Restriction

The House last week impeached Davide for allegedly misusing a
fund meant to augment judges' salaries. Supreme Court spokesman
Ismael Khan, who has denied any misuse of the fund, said there
haven't been any talks to settle the dispute.

The Thai baht, little changed at 39.93, stalled gains after
the central bank yesterday said it made some investment banks
sell the currency below market rates because they breached the
300 million baht ($7.5 million) limit on non-resident
accounts.

The central bank on Oct. 15 ordered domestic lenders to stop
paying interest on some non-resident baht accounts in an attempt
to put curbs on speculators betting the currency will rise.

"The new foreign-exchange rules have restricted the
market," halting the baht's 7.9 percent rally this year, Cheung
said.