Rupiah's rally boost Asian monies

Rupiah's rally boost Asian monies

HONG KONG (Dow Jones): A wave of post-election euphoria lifted the Indonesian rupiah Tuesday, buttressing positive sentiment toward other Asian currencies.

As initial results indicated a strong showing by Megawati Soekarnoputri's PDI-P party and Gus Dur's PKB party in Monday's Indonesian parliamentary elections, the Jakarta stock market's benchmark Composite index rocketed by 14 percent.

In the foreign-exchange market the rupiah rose, as dealers reported strong bidding interest from U.S. and European investment houses looking to buy into the rally in Indonesian equities.

Cheered by Indonesia's nearly trouble-free poll and encouraged by Wall Street's overnight rally, offshore investors bought into other Asian stock markets, boosting currencies across the continent.

But even as the rupiah led the rally in regional foreign- exchange markets, currency analysts advised caution, warning that Indonesia still faces formidable political and economic obstacles to recovery.

The Indonesian currency climbed to its highest level in four weeks, with the U.S. dollar falling to Rp 7,660 toward the end of Asian trading hours, from Rp 7,765 late Monday.

The rupiah's rally boosted the currency of neighboring Singapore, where selling pushed the U.S. dollar lower to test what traders described as solid support at S$1.7150.

Toward the close of local dealing, the U.S. currency lifted slightly off its earlier low to trade at S$1.7165, down from S$1.7265 the previous day.

The Thai baht also rose strongly Tuesday, as the U.S. dollar dropped below support at 37.05 baht. Traders, however, attributed the rise more to a 2 percent rally in local stocks than to a spill-over of positive sentiment following the poll in Indonesia, which is seen as too distant to have much effect on the baht.

Late in Asian trading, the U.S. dollar was quoted at 36.9400 baht, down from 37.0750 baht late Monday.

The Philippine peso also rose Tuesday. At the close of local dealing, the U.S. dollar was quoted at 37.845 pesos, down from 37.980 pesos at the end of Monday's session.

In North Asia, the South Korean won ended stronger against the U.S. dollar, after state-owned banks failed to step into the market as expected to absorb inflows of U.S. dollars generated by foreign trade and investment.

By the end of the local trading session, the U.S. currency had fallen to 1,178.50 won, from 1,183.20 won at Monday's close.

The U.S. currency also lost ground against the New Taiwan dollar, which hit three-and-a-half-month highs Tuesday, as it continued to benefit from bullish comments made Monday by a senior central bank official.

At the local close, the U.S. dollar was quoted at NT$32.579, down from NT$32.629 Monday.