Yen lends support to Asian currencies, rupiah pressured

Yen lends support to Asian currencies, rupiah pressured

SINGAPORE (Dow Jones): A firmer yen lent support to most Asian
regional currencies Tuesday, while heightening political tensions
in Indonesia kept pressure on the rupiah.

The Indonesian rupiah closed lower Tuesday in steady trading
as offshore participants continued to square forward positions.

Hundreds of supporters of embattled President Abdurrahman
Wahid occupied a ferry port in Surabaya and warned of a bloody
uprising if opponents try to oust the President, much more
popularly called with his name Gus Dur, on allegations of
corruption. The port city is located in Gus Dur's political base
of East Java.

However, the effect on the rupiah was muted due to new
regulations imposed by the central bank designed to limit
speculative trading of the currency.

The dollar closed Asian trading at Rp 9,575, up from Rp 9,560
late Monday.

New offshore trading rules that came into effect last month
ban onshore banks from lending rupiah offshore. Offshore players
have to square forward positions to come into line with the new
regulations by Wednesday.

Players squared off long-rupiah positions, buying U.S.
dollars, traders said.

Also, corporate demand for dollars is expected to remain
strong going forward and should prop up the dollar, they added.

The dollar is expected to trade Wednesday between Rp 9,525 and
Rp 9,585.

After flirting with the 116 yen mark only one day earlier, the
dollar fell to Y114.33 late Tuesday, its lowest level in more
than a month, as investors in Tokyo expressed their increasing
concern about the outlook for the U.S. economy.

The South Korean won, New Taiwan dollar, Thai baht, Singapore
dollar and Philippine peso all benefited from the stronger yen.

The U.S. dollar closed at NT$32.288, down from NT$32.309
Monday, and its lowest close since Nov. 18.

The local currency reached an intraday high of NT$32.231 to
the U.S. dollar before the central bank intervened to slow the
decline of the U.S. currency. That triggered short covering in
the afternoon session which helped lift the U.S. dollar off its
intraday low.

The Thai baht floated higher with the rising yen as market
participants waited to see the final shape of incoming Prime
Minister Thaksin Shinawatra's government.

Late in Asia the dollar was quoted at 42.345 baht, down from
42.525 baht the previous session. However, the U.S. dollar's
underlying bullish trend remains in place and the pair are likely
to trade in a 42.200 baht-42.700 baht range in the intermediate
term, said UBS Warburg's Mansoor Mohi-uddin.

The dollar closed at 48.610 pesos on the Philippine Dealing
System, down from 49.110 pesos Monday.
T he absence of fresh negative developments in both the
political and economic fronts supported the peso's rise.

The Singapore dollar traded in a narrow range as market
players awaited an exchange rate policy statement from the
Monetary Authority of Singapore later this month.

Late Tuesday, the U.S. dollar was at S$1.7407, compared with
S$1.7410 late Monday.

The MAS said it would release the statement when it issues its
Annual Economic Survey, due out in the third week of February.

The slowdown in global economic growth has prompted many
analysts to speculate that MAS will announce it is adopting a
more accommodative foreign exchange policy.