Falling rupiah jolts Asian markets' rally
Sarah Davison
Hong Kong, Jan 20: Asia's rip-roaring rally ran out of steam on Tuesday, with the biggest markets consolidating at higher levels while the region's worst underperformer, the Indonesian rupiah, continued to cast a shadow on other currencies.Early week optimism was obviously fading, with cautious traders describing follow-on strength in Tokyo and Hong Kong as consolidation rather than further evidence of recovery. ``We had a very bad kick-off this year, all the markets were down except Korea," said Ambrose Chang, chief investment officer at Daiwa Capital Management. ``I would say the markets were in a technical sort of bear market rally. Now they seem to be consolidating. There's not much on the upside at the moment."The region's major stock markets in Hong Kong and Tokyo were strong but cautious while clinging on to recent gains. The Nikkei 225's four-day winning streak slowed with a 61-point gain at 16,323 early in the afternoon session, with the market apparently taking a breather from a rally that
has added nearly 1,600 points to the benchmark average. ``Even if the Nikkei falls by 500 points or so over the next few days, we could still say that the market's tone is strong after four days of sharp rises," an official at a second-tier brokerage said. The yen slipped against the US dollar to trade at 129.60. The Hang Seng blue chip index was also 53 points stronger at 9,453 after reversing course mid-morning with the Hang Seng index futures contract up 175 points at 9,695. ``People now reckon the market should probably be fairly trading at about 10,000 so that is why even at these levels they buy quite aggressively," said Percy Au-Young, sales director at DBS Securities. Elsewhere, the mood was less confident. Seoul was suffering once again, with the won falling on dollar demand to settle import deals and stocks suddenly weak as profit-taking struck after recent, powerful gains that continued up until mid-morning on Tuesday. Taiwan markets were firm but nervy with the Chinese New Year holidayjust around the corner. The main stock index was 60 points higher at 7,907 while the Taiwan dollar was just a tad weaker at TW$33.64 against Monday's close of T$33.586 on the softer yen and sliding rupiah. Indonesia's rupiah plunged yet again, hitting 10,400 to the US dollar before bouncing back to 10,000 as overwhelming corporate demand for dollars continued to pressure the currency. The rupiah's persistent weakness cast a shadow over Southeast Asia, depressing the Singapore dollar, the Thai baht and the Malaysian ringgit. Stock markets in these centres followed suit, dipping more than one per cent as Monday's bullish sentiment evaporated. But Manila bucked the trend, with the peso resisting the rupiah's slide due to perceptions of some indirect help from the central bank. The firm peso helped to lift stocks above the 1,800 resistance leve, but a late rush of profit-taking dragged the key index down to close 1.97 points higher at 1,773.86. "Investors took the fall of the rupiah as an excuse to take
profits," said one trader.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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