Asian Currencies: Indonesian Rupiah Gains, Won Falls on Stocks

By Lilian Karunungan

Aug. 21 (Bloomberg) -- The Indonesian rupiah rose to the highest in almost two weeks on speculation the central bank is seeking a stronger currency to curb inflation. The South Korean won fell as global funds dumped local stocks.

The rupiah was the best performer among Asia's 10 most- active currencies outside Japan as Bank Indonesia Governor Boediono said on Aug. 15 that inflation is the main concern for the government. Consumer price gains quickened to 11.9 percent in July, the fastest in 22 months, the Central Statistics Bureau said on Aug. 1.

``The central bank has been calling on all banks not to touch 9,200,'' said Iwan Ridwan Gunandar, a currency trader at PT Bank CIMB Niaga in Jakarta. ``They don't want any speculation on the rupiah. Inflation is still high.''

The rupiah rose as high as 9,140 per dollar, its strongest since Aug. 8, before trading at 9,148 as of 10:36 a.m. in Jakarta, versus 9,165 yesterday, according to data compiled by Bloomberg. The won slid 0.2 percent to 1,051.30 in Seoul, according to Seoul Money Brokerage Services Ltd.

The won was the worst performer among the 10-most traded currencies in Asia outside Japan as foreign fund managers sold more Korean shares than they bought for a third day, stock exchange data show. Losses may be limited after the Bank of Korea yesterday bought the won to stem its decline and curb inflation at a decade high, said Ko Yun Jin, a currency dealer with Kookmin Bank in Seoul.

Intervention Speculation

``Hefty foreign sales of local stocks in the past couple of days will curb any gains in the won,'' Ko said. ``The dollar's upside is capped by intervention fears.''

The won fell 11 percent this year, the worst performance after the Thai baht among the Asian currencies.

Vice Finance Minister Kim Dong Soo said yesterday the government is monitoring volatile currency moves. Central banks intervene in currency markets by either selling or buying foreign exchange.

The Kospi index lost 1.5 percent today, extending losses to a fourth day.

Thailand's baht advanced, snapping a five-day decline, on speculation the central bank will support the currency as accelerating inflation and rising political risk prompt investors to sell the nation's assets.

The Election Commission is seeking the dissolution of Prime Minister Samak Sundaravej's People Power Party. The Commission will approach the Constitutional Court on Sept. 2 to disband the party on charges of vote buying. Inflation quickened to a decade high of 9.2 percent in July.

Central Bank Support

The Bank of Thailand's senior director Pongpen Ruengvirayudh this week said the bank will support the baht ``if needed,'' without confirming whether it bought the currency. Overseas investors sold $255 million more Thai stocks than they bought this month, Bloomberg data show.

``The central bank is trying to support the baht,'' said Apichart Suratanasurang, a foreign-exchange trader at BankThai Pcl in Bangkok. ``We aren't seeing any real inflows. There is still buying of dollars.''

The baht rose 0.2 percent to 34.10 per dollar in Bangkok. The currency has weakened 6.5 percent in the past three months.

Elsewhere, the Malaysian ringgit dropped 0.3 percent to 3.3425 against the U.S. dollar. The Philippine peso was little changed at 45.65, according to Tullett Prebon Plc. The Singapore dollar traded at S$1.415 compared with S$1.4146 yesterday, while Taiwan's dollar fell 0.1 percent to NT$31.429. Vietnam's dong was little changed at 16,620.

To contact the reporters on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net