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Indonesian rupiah

JAKARTA: Indonesia's rupiah dropped on Wednesday to its lowest levels since November as steady offshore dollar demand from corporates hit a currency already weakened by unrest and political uncertainty.

The rupiah was quoted at 7,380/7,400 to the dollar versus 7,300/7,330 in late local trade on Tuesday.

"There has been steady corporate demand today that has just pushed the rupiah down. The situation in Aceh and Ambon has not helped," said a dealer at a European bank in Jakarta.

Separatist tension in the resource-rich province of Aceh and religious violence in the Moluccas have weighed on the rupiah in recent weeks, and on Wednesday the central bank governor blamed the unrest for the currency's weakness.

Visits by President Abdurrahman Wahid to Aceh and Vice President Megawati Sukarnoputri to the Moluccas this week failed to provide any breakthrough in the conflicts there.

Dealers said they expected the currency to hit 7,400 in the short term, although it might find some support at that level.

Bank Indonesia's one-month SBI weighted average interest rate fell to 11.16 percent in Wednesday's auction from 11.30 percent a week ago.-Reuters

Chinese yuan

SHANGHAI: China's yuan ended higher against the dollar on Wednesday as domestic banks bought the local unit due to increased demand before the Chinese Lunar New Year holiday, dealers said.

The yuan finished at 8.2782 to one U.S. dollar against 8.2785 on Tuesday after moving in a narrow range of 8.2781 to 8.2786.

"Buying by domestic banks pushed up the yuan for the third consecutive day," said a local bank dealer. "But the yuan is likely to meet resistance at the 8.2780 level."

Dealers said local companies needed more yuan for staff bonuses ahead of the Lunar New Year, which is also traditionally a period of heavier spending.

But domestic banks were unlikely to build heavy positions ahead of the long holiday, they said.

The yuan was likely to move in a range of 8.2780 to 8.2790 before the holiday, dealers said.

The yuan closed marginally higher against the Japanese yen at 7.8230 to 100 yen against 7.8300 on Tuesday. It ended up slightly against the Hong Kong dollar at 1.0641 to HK$1.0 from 1.0644.-Reuters

S Korean won

SEOUL: The South Korean won closed barely changed versus the dollar on Wednesday after a tight tug of war between forces long on dollars and steady corporate dollar sales, dealers said.

The won closed at 1,127.2 compared with Tuesday's close of 1.127.1.

It opened at an intraday low of 1,128.0 and moved in a narrow range topped at 1,125.8.

Dealers said the market saw steady dollar inflows from exporters as the end of the month approaches and ahead of the lunar New Year's holiday February 4-6. But the amount was smaller than expected, analysts said.

"Market participants, including offshore traders, were not very active due to concerns about government intervention and market jitters over fund redemptions," said a local bank dealer.

Traders said the won/dollar pair stayed near the 1,126 won level for much of the day as players stayed long on dollars on concerns that investment trust firms could face a wave of redemptions linked to uncollateralised bonds issued by Daewoo Group firms.

The government is set to raise a ceiling on redemptions of the Daewoo-linked beneficiary certificates on February 8 and the central bank has estimated the trusts could see 15 trillion to 30 trillion won in redemptions then.

Dealers said the won's uptrend was quite limited as the government appeared determined to keep the Korean currency on a weaker bias, particularly after forecasting a sharply lower trade surplus this year.

South Korea's economic ministers said on Tuesday the trade surplus was likely to fall to about $12 billion from $24.5 billion in 1999 due to a sharp rise in imports.

The Finance Ministry said January's trade surplus was showing a deficit, although it was expected to be "near even" by month's end.

Traders said state-run banks were seen absorbing dollars from export deals in the morning session.

"Trading is likely to be rangebound until after the lunar New Year's holiday," said another local bank dealer.-Reuters

Philippine peso.

MANILA: The Philippine peso closed a shade lower on Wednesday as banks took direction from slightly weaker regional currencies and with some corporate dollar demand coming in, traders said.

But market reaction to the new foreign exchange rules released by the central bank was generally positive, they said.

The peso closed at 40.495 to the dollar against Tuesday's 40.445. The local currency was locked within a tight range of less than 10 centavos. Some dealers said the peso followed the baht which was quoted at 37.35-37.42 to the dollar from 37.26 in early trade.

Corporates also bought dollars below the 40.54 level, traders said.

"There was two-way trade but the range was tight, I couldn't see a clear direction," said a trader from a foreign bank.

Most traders said the new central bank rule which set a 90-day holding period for portfolio inflows placed in bank deposits should be good for the economy in the long term.

The central bank released a copy of its new circular on foreign exchange transactions which take effect immediately.

The new rule aims to quell volatility in the currency market by preventing investors from parking funds in short-term deposits for speculative purposes.

"It might be good for the economy in long run. If we have a stable peso, interest rates will also be stable" since the central bank will not be forced to use interest rates to curb exchange rate volatility, a trader from another foreign bank said.

Turnover slowed to $233.30 million from Tuesday's $337.10 million.

Traders said the peso is likely to remain confined within a tight range of 40.50 to 40.60, depending on the movement of regional currencies.-Reuters