SE Asian monies higher as rupiah sentiment brightens
SE Asian monies higher as rupiah sentiment brightens
SINGAPORE (Dow Jones) Fund inflows lifted Southeast Asian currencies higher against the U.S. dollar Monday, as offshore investors maintained their bullish stance towards the region. Even the rupiah -- long shunned as a pariah currency -- benefited, rising to its highest level in 16 weeks as market players poured money into Indonesian assets.
The Thai baht and the Philippine peso also ended Asian trading higher, bolstered by buying interest in the offshore market. The one currency to miss out on the regional trend was the Singapore dollar, which ended Asian hours flat on the day, despite an upwards revision to the government's official growth forecast for 1999.
Activity in North Asia was more subdued. Both the South Korean won and the New Taiwan dollar ended little changed on the day as market players, fearful of central bank intervention, held back from buying into the local currencies.
Despite a lack of activity caused by the closure of several regional and major markets for holidays on Monday, overall sentiment toward Asian regional markets remained undimmed.
Indonesia, which in recent months has lagged behind the rally in other Asian markets, attracted some of the heaviest investment flows, said dealers.
"There really is good genuine demand for rupiah from investors. There are a lot of funds going into the Jakarta stock market," said one rupiah trader at a U.S. bank in Singapore as the Jakarta Composite stock index added nearly 5 percent on Monday, leaving it up by more than 30 percent over the year to date.
Accelerating sales of U.S. dollars for rupiah had earlier pushed the U.S. currency below the Rp 8,000 level for the first time since mid-January. By the end of Asian trading the U.S. dollar had dropped to Rp 7,940, down from Rp 8,230 late on Friday.
Despite the IMF official's bullish outlook, some foreign exchange traders questioned the rupiah's potential to make further gains in the near term.
According to traders at one U.S. bank in Singapore, offshore clients have already begun selling rupiah to take their profits from the currency's recent gains. At the same time dealers report heavy purchases of the U.S. currency by banks in Jakarta taking the opportunity to acquire cheap dollars.
In the short term, the U.S. dollar is likely to find some support at Rp 7,800, while Rp 7,500 should prove a formidable psychological barrier, said a rupiah trader at one U.S. bank in Singapore.
Among other regional currencies, the Thai baht and the Philippine peso both rose on Monday, with the baht hitting its highest level since mid-February.
Traders in Singapore, however, warned that the baht's rise, which saw the U.S. dollar pushed below the 37.00 baht, had been exaggerated by the closure of the domestic foreign exchange market for a holiday on Monday.
Demand for the U.S. currency from onshore corporate clients is likely to re-emerge on Tuesday, offsetting the demand for baht from foreign investors and potentially reversing Monday's slide in the U.S. dollar, they said.
Late on Monday the U.S. dollar was quoted in Singapore at 36.9850 baht, down from 37.2350 baht towards the end of Asian trading on Friday.
The Philippine peso also ended higher, as the local stock market continued to attract foreign investors. The market reacted positively to the central bank's latest cut in its benchmark borrowing and lending rates - its 12th so far this year.
At the close of local trading, the U.S. dollar was quoted at 37.815 pesos, down from 37.989 pesos on Friday.
The bullish tone in regional markets failed to lift the Singapore dollar, however, despite the weekend's upward revision of the government's 1999 growth forecast to 0 percent to 2 percent from -1 percent to 1 percent previously.
After being sold to a low of S$1.6960, the U.S. dollar was pushed to a high of S$1.7050 in thin trading by buying from local banks before it finally settled at S$1.7005. Late on Friday the U.S. dollar was quoted at S$1.7030.
In North Asia both the South Korean won and the new Taiwan dollar were little changed on the day, with the won finishing down slightly, and the new Taiwan dollar edging higher.
Trading in the won was generally subdued following the government's announcement on Friday of a $4.6 billion package of intervention measures designed to hold down the won and safeguard the competitiveness of Korea's exports.
At the close of domestic dealing, the U.S. dollar was at 1,190.10 won, up just a fraction from 1,188.00 won at Friday's close.
Against the Taiwanese currency, the U.S. dollar ended at NT$32.686, down marginally from NT$32.688 on Friday on moderate trading volume.