SINGAPORE, Mar 20: Asian currencies strengthened on Friday as the US dollar struggled to regain its poise after an early surge past 131 yen met swift and unexpected Bank of Japan intervention.The yen sagged on news that the release of Japan's economic stimulus package would be delayed and also after a surprise narrowing in the US-Japan trade gap.
The Indonesian rupiah lurched through the 10,000 level on late stop-loss dollar sales, but its rise, on very thin volumes, left traders unconvinced as Jakarta continued to send out confusing policy signals. The official Antara news agency said the International Monetary Fund had agreed with Indonesia's subsidy on imports of essential commodities.
Meanwhile, the currency board saga continued to simmer, though dealers said it looked as if Jakarta was backing away from a traditional fixed-rate system to settle the troubled rupiah currency.
Finance minister Fuad Bawazier said the government was examining ways to stabilise the rupiah and the currency board systemwas only one alternative."We have other alternatives that are being discussed. We will announce it later," he told reporters after a meeting with senior International Monetary Fund official Hubert Neiss, who is in Jakarta for the fund's review of economic reforms.
Economic minister Ginandjar Kartasamita was quoted in a Japanese newspaper as saying Indonesia may abandon the currency board proposal. This followed comments by IMF chief Michel Camdessus who said in a US newspaper interview that he believed the idea had been dropped. Other southeast Asian currencies benefited from dollar sales by US investment houses in a market long on dollars.
"In the coming week, the regionals should continue their upmove, satisfying their technical targets," a currency analyst in Singapore said.
The Malaysian ringgit crept towards 3.60 to the dollar on positive sentiment ahead of finance minister Anwar Ibrahim's statement on economic measures and Bank Negara's annual report next week. "Anwar's announcement is expected tojust be a fine tuning of existing measures. The first austerity package was a big step and if there are any others, it'll be kind of a bonus," the currency analyst said.
The Singapore dollar mirrored moves in the ringgit and yen, gaining from heavy US dollar sales by US houses near its lows of 1.6210/20. The market ignored news of a 28.1 per cent yearly rise in Singapore's February non-oil domestic exports.
The Philippine peso was better bid, reaching a high of 37.50, as corporates and local banks offloaded dollars amid expectations of fund inflows for equity and fixed income investments.
The Bankers Association of the Philippines has decided to remove the peso volatility band from March 23, but said on Friday that it could reimpose it if conditions justified.
In Thailand, the baht held under the 40.00 level on active dollar sales linked to capital inflows after overnight squaring of dollar longs in New York. Dealers said it should head for 38.70 as the market shrugged off news the no-confidencedebate against prime minister Chuan Leekpai's government was continuing an extra day, with a vote now set for Saturday.
Chuan's government is expected to sail through the debate. In north Asia, the Korean won firmed on active dollar sales. The central bank denied a local media report that it had agreed with the IMF to lower interest rates if the won remained in its current range for about a week.
Hong Kong dollar forwards were soft but off their lows after an overnight sell-off on Chinese premier Zhu Rongji's pledge that China would defend the Hong Kong dollar peg at any cost.
His comments, which Asian traders treated as yet another declaration of China's well-known position, sparked more of a reaction in Europe and New York on Thursday.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
