Rupiah's rebound helps lift regional currencies

Rupiah's rebound helps lift regional currencies

SINGAPORE (Dow Jones): Asian currencies were mixed late Tuesday, with the beleaguered Indonesian rupiah regaining some ground as investors unwound their long-dollar positions, dealers said.

The rupiah's recovery helped lift the Thai baht, the Philippine peso and the Singapore dollar off their intraday lows in late trading.

In late trade, the dollar was at Rp 9,285, down from Rp 9,520 late Monday.

Those liquidating their long-dollar positions had probably given up waiting for the U.S. currency to break above Rp 9,570 to Rp 9,600, dealers said. The dollar had touched those levels last week, but rapidly retreated thereafter.

Fears that Indonesian President Abdurrahman Wahid would be impeached have waned, providing some reprieve for the rupiah, currency watchers said.

"There's also a feeling maybe the Indonesian authorities are considering alternatives to limit the rupiah's losses," said Steve Brice, foreign exchange strategist at Standard Chartered Bank.

State banks were said to have defended the rupiah Tuesday and local interest rates are expected to climb higher this week.

Political uncertainties, however, remain high and the rupiah's respite will likely be short-lived. Some analysts still predict that the rupiah will resume its downtrend toward the psychologically important Rp 10,000 mark to the dollar ahead of the People's Consultative Assembly session in mid-August, when Gus Dur's performance will be reviewed.

"We'll still see a firmer dollar going forward," said Brice. Strong corporate demand for the U.S. currency around Rp 9,250 to Rp 9,300 will likely provide strong support for the dollar, he added.

The mood is also cautious ahead of an expected showdown between Wahid and the Indonesian parliament Thursday over his controversial sacking of two ministers earlier this year, dealers said.

The Thai baht - which briefly touched a nine-month low of 40.375 baht to the dollar on offshore dollar demand earlier in the day - recouped some of its losses, thanks to the rupiah's rebound and dollar-selling by local exporters, dealers said.

The dollar was at 40.255 baht, up slightly from THB40.225 late Monday.

The Philippine peso moved in tandem with the baht and the rupiah. The dollar was at 44.545 pesos, down from Monday's close of 44.590 pesos, and way below Tuesday's intraday high of 44.660 pesos.

The U.S. currency had also pulled back against the Singapore dollar but remained well-bid despite the rupiah's recovery and suspected intervention by the Monetary Authority of Singapore late Monday, dealers said.

Some investors appeared to be holding short positions in the U.S. dollar versus the Singapore currency that they needed to cover, dealers said.

The U.S. dollar was at S$1.7462, down from S$1.7489 late Monday, the level it was trading before the de facto central bank stepped in.

After having allowed the local currency to drift lower in the past two weeks, the MAS, which rarely comments on its actions, was rumored to have defended the Singapore dollar around the S$1.7470 to S$1.7490 range to the U.S. currency late Monday, dealers said.

The U.S. dollar ended at NT$30.960, up from Monday's close of NT$30.912.

The South Korean won closed slightly lower following a government bond issue and amid fears of intervention by local monetary authorities, dealers said.

The government warned last week it was prepared to intervene to prevent the won from appreciating too sharply.

The dollar finished at 1,113.5 won, up from Friday's close of 1,112.90 won. South Korean markets were closed Monday for a national holiday.