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Indian rupee

BOMBAY: The Indian rupee ended on Wednesday slightly firmer after mostly trading in a tight band amid steady dollar supplies, dealers said.

The rupee ended at 43.585/59 per dollar against the previous close of 43.5975/6025.-Reuters

Indonesian rupiah

JAKARTA: Indonesia's rupiah tumbled through 7,500 to the dollar on Wednesday as concern about a showdown between President Abdurrahman Wahid and former military chief General Wiranto shook the currency.

Dealers said political concerns helped fuel offshore dollar buying which gathered pace after the broke psychological support at 7,500. They said Indonesian corporates were also expected to come into the market to buy dollars, fearful that the rupiah could drop further in coming days.

"I have heard there is quite a lot of corporate dollar demand still to be filled," said one dealer at a local bank. "They were waiting for the rupiah to strengthen, but now they are starting to worry."

The rupiah shrugged off the day's positive economic news a pledge by donors in the Consultative Group on Indonesia (CGI) to disburse up to $4.7 billion to Indonesia to cover its budget deficit in April to end-December. The news came as no surprise.

The rupiah was quoted at 7,555/7,585 to the dollar versus 7,440/7,490 in late local trade on Tuesday.

"U.S. rate concerns have dampened sentiment but the most worrying thing now is the souring relations between the government and the military because it is much harder to make a prediction in this fluid situation," one European bank dealer said.

Markets expect the U.S. Federal Reserve to raise interest rates later on Wednesday, with most players discounting a rise of 25 basis points.

General Wiranto on Wednesday defied his president's order to step down over his role in last year's violence in East Timor.

President Abdurrahman Wahid, in one of his riskiest political moves since coming to office three months ago, said on Tuesday his influential coordinating minister for political and security affairs should resign immediately.

They said any rupiah recovery would be slowed by dollar buying around 7,500 as domestic corporates stepped in to sell their rupiah.

Bank Indonesia said 5.4 trillion rupiah in funds matured early on Wednesday. The benchmark interbank overnight rate hovered around 9.5 percent for local banks and around 9.375 percent for foreign banks.-Reuters

Chinese yuan

SHANGHAI: China's yuan ended up against the dollar in thin trade on Wednesday, lifted by local bank buying before the Chinese Lunar New Year holiday, dealers said.

The yuan ended at an intraday high of 8.2772 to one US dollar against 8.2775 on Tuesday after touching a low of 8.2777.

The close was the highest in more than three months, just below the 8.2770 level reached on October 26.

"Trading was dominated by domestic banks buying yuan," said a local dealer. "But the yuan demand ahead of the Lunar New Year holiday does not herald a trend."

Dealers said local banks bought the yuan on demand from companies for funds to pay their workers year-end bonuses.

The yuan was likely to fall slightly on technical selling on Thursday and Friday, the last two trading days before the holiday, they said.

The China Foreign Exchange Trade System will be closed from February 5 to February 11 for the holiday. Trading will resume on February 12.

The yuan closed higher against the Japanese yen at 7.5928 to 100 yen against 7.7710 on Tuesday. It ended almost unchanged against the Hong Kong dollar at 1.0632 to HK$1.0 from 1.0633. -Reuters

S Korean won

SEOUL: The South Korean won ended weaker against the dollar on Wednesday as the greenback surged to its strongest level in five months versus the yen in Tokyo trade, dealers said.

But some cautious players preemptively unwound their long dollar positions as the US unit faced strong resistance at the 109 yen level, they said.

The won closed the day at 1,130.5 compared with Tuesday's close of 1,126.7. It opened at an intraday high of 1,128.5 and quickly breached the recent barrier of 1,130, retreating to 1,134.5 in mid-afternoon trade.

"Some banks were seen selling dollars after they saw the US currency face strong resistance at the 109 level," said a local bank dealer.

"They appeared to believe that if the dollar/yen rate makes a turnaround after the Fed meeting, the greenback could also plummet below the 1,120 won level quickly," he said. Offshore players, who had built up their dollar positions, also followed local banks and turned sellers in late afternoon trade, dealers said.

The dollar was quoted at 108.51/8.56 yen in late afternoon Tokyo trade after reaching a fresh five-month high at 109.06 yen.Most players had maintained their dollar holdings in line with the greenback's surge against the yen ahead of the US Federal Reserve's monetary policy meeting.

Local dealers shared the view that the Fed was expected to raise its target for federal funds rate by 25 basis points to 5.75 percent. But they said the expected rate hike would have little market impact as such expectations have largely been factored in. Sporadic dollar sales from exporting companies were absorbed by state-run banks, including the Korea Development Bank.

The market will likely see reduced dollar supplies from exporters on Thursday ahead of the lunar New Year's holiday February 4 to 6, dealers said.

They expected the won to move between 1,127 and 1,135 on Thursday. The six-month non-deliverable forward (NDF) won was quoted at 1,132/33 versus 1,127/29 late Tuesday.-Reuters

Philippine peso

MANILA: The Philippine peso finished at a day low on Wednesday as banks short on dollars fixed their positions in afternoon trade ahead of an expected hike in US interest rates.

The US Federal Reserve is expected to announce a 25 basis point hike in its key Fed funds rate to a target 5.75 percent at the end of its two-day meeting later today. Some analysts have forecast a 50 basis point hike.

The peso closed at 40.655 to the dollar against Tuesday's 40.56. It opened marginally higher at 40.54 but immediately slipped with some corporate demand in morning trade.

"If there is a 25 basis point hike, the peso will still probably depreciate, but not that much. It has to adjust because of parity issues," said a trader from a local bank.

"If we keep our (local) interest rates stable, which are quite low, the exchange rate has to adjust to compensate for the differentials (between US dollar and peso assets).''

Central bank governor Rafael Buenaventura has said the local overnight borrowing rate may be increased by 25 basis points from the current 8.75 percent only if there is pressure on the peso and inflation arising from the Fed hike.

"The Fed has been constantly increasing its interest rates but local rates have not moved because the government is bent on pump-priming the economy," one trader said.

Traders said the peso could weaken and test its major support of 40.75 to the dollar after the Fed announcement. However, some banks may start unloading dollars at that level, pre-empting moves by the central bank to hike its overnight borrowing rate, they said.-Reuters