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Indian rupee

BOMBAY: The Indian rupee ended little changed from opening levels on Tuesday as heavy dollar inflows accumulated over the long weekend were absorbed by state-run banks, dealers said.

Dealers said apart from supplies bunched over the two festival holidays on Friday and Monday, there were also export dollar sales.

The rupee ended at 43.565/57 to a dollar compared with the opening level of 43.56/575.

It had ended Thursday at 43.575/58 but had firmed in thin trade in some centres on Monday to 43.55/56.

"Despite accruals over two days, the rupee did not gain much. Nationalised banks were buying dollars," a dealer with a private bank said.

"All buyers and sellers were at 43.5675 today," another dealer said.

State-run banks have been buying dollars over the past few weeks, suspected to be on behalf of the central bank, and this has also been helping ease the tightness in the money market through infusion of rupee funds, dealers said.

Dealers said the market did not react to an improvement in the country's rating outlook but overall sentiment had improved.

International rating agency Standard & Poor's said on Sunday it affirmed India's long term BB foreign currency rating and revised the outlook to positive from stable.

There was paying in some short-term maturities as banks funded call requirements anticipating tighter money market conditions, dealers said.

Call rates ended higher at 8.75-9.0 percent on Tuesday.

The one-month premium ended steady at 4.59 percent while six months ended up at 3.49 percent compared with on Thursday's 3.44.

Markets expecting news of closer economic ties or easing of sanctions during US President Bill Clinton's visit to India were disappointed.

Clinton was in Delhi on Tuesday and called for India and Pakistan to renew direct dialogue on the Kashmir border disputes.

He said he was optimistic after his talks with Indian Prime Minister Atal Behari Vajpayee on reaching common ground on restraining India's nuclear programme.

Vajpayee however told Clinton India must maintain a minimum nuclear deterrent but will conduct no further nuclear tests.

There was no threat of any war, Vajpayee said. -Reuters

Indian rupee

BOMBAY: The Indian rupee moved into a firmer range in opening deals on Tuesday as dollar inflows accumulated over the long weekend were offloaded, dealers said. India's foreign exchange markets were closed on Friday for a festival holiday.

Markets in Bombay, the main commercial centre, and in some cities in the north were shut on Monday for another festival, but the rupee firmed to levels of 43.55 in thin trade in other centres in the country, dealers said.

The rupee was quoted at 43.5625/5675 per dollar at 9:15 a.m. after it opened at 43.56/575. It had ended on Thursday at 43.575/58. Dealers said overall sentiment had improved after international rating agency Standard & Poor's said on Sunday it affirmed India's long term BB foreign currency rating and revised the outlook to positive from stable.

But the upbeat sentiment would not necessarily reflect in the rupee's level, they said."Gulf flows and nostro balances are heavier than usual today," a dealer with a state-run bank said. Dealers said the rupee's gains will be limited as state-run banks will mop up dollars on behalf of the central bank.

"With the strength of the dollar against other currencies overseas, the central bank would be concerned about the value of the rupee against the dollar and judging by their activities over the past few weeks, I think they'd be comfortable holding the rupee around these particular levels," V.Ravikumar, chief dealer at ABN Amro Bank told Reuters Television.

"Mopping up of dollars is also adding to the local currency liquidity which has been tight over the past few weeks," he said. India's foreign exchange reserves rose to a record high $36.533 billion on March 10 from $36.006 billion in the previous week, the Reserve Bank of India (RBI) said in its weekly statistical supplement on Saturday.

Dealers said forward premiums will be active as banks funded near-term requirements amid tight call money rates and corporates hedged imports before the month-end, the accounting year end. The six-month premium ended at an annualised 3.44 percent on Thursday against the previous close of 3.53 percent. -Reuters

Indonesian rupiah

JAKARTA: Indonesia's rupiah weakened on Tuesday after the government said the Bank Restructuring Agency (IBRA) did not have to convert money from the sale of its Astra stake into rupiah this week.

Foreign exchange markets had been braced for the impact of a sudden conversion of the expected $500 million proceeds from the sale this week. The money is to be used to help bridge the budget deficit for the fiscal year that ends on March 31.

The rupiah was quoted at 7,460/7,480 to the dollar compared with 7,440/7,460 in late local trade on Monday.

Trading volume remained thin as players awaited Tuesday's US Federal Open Market Committee meeting, expected to raise rates by 25 points.

"Some players had been short on dollars on worries the government may ask IBRA to convert the Astra proceeds into rupiah for the budget," a dealer with a European bank said.

"This could suddenly boost the rupiah to even 7,000 but it could only benefit speculators."

The winner of the Astra stake sale has to pay later this week.

Anshari Ritonga, director-general in charge of the budget at the finance ministry, told Reuters IBRA would not be required to convert the proceeds into rupiah.

Bank Indonesia said 6.3 trillion rupiah in funds matured early on Tuesday. Overnight rates still hovered at 9.25 percent for foreign banks and 9.5 percent for local banks. -Reuters

Chinese yuan

SHANGHAI: China's yuan firmed against the dollar on Tuesday in light trade, largely ignoring China-Taiwan tensions.

Bank dealers said the market paid more attention to the meeting of Federal Reserve's policy-setting committee later on Tuesday.

The yuan ended at 8.2781 to one US dollar from 8.2786 on Monday after moving in a tight range of 8.2780 to 8.2787, against 8.2782 to 8.2788 a day earlier.

Taiwan's military said on Tuesday that China's armed forces were holding routine training missions, but no large-scale exercises.

Opposition candidate Chen Shui-bian's victory in Taiwan's presidential election on Saturday has heightened investors concern over further deterioration in cross-Strait relations.

But China's foreign exchange market felt little impact.

"Dollar demand stayed at the usual daily average level today," said a local bank dealer.

Dealers said they saw no signs of central bank intervention, and dollar buying could be mainly for trade settlement.

The US Federal Open Market Committee (FOMC) is expected to raise the federal funds rate for overnight loans between banks by a quarter of a percentage point to six percent, according to a poll conducted by Reuters of 30 major investment banking firms.

Although the impact of a rate hike would not filter into China's tightly controlled yuan market immediately, dealers said they would still closely monitor whether China's central bank would raise interest rates for dollar deposits.

"This could affect the interest spread between the yuan and dollar and eventually affect dollar demand," said a dealer at a foreign bank.

Dealers said they expected the yuan to weaken further, testing 8.2800 in the near term before the People's Bank of China, the central bank, steps in.

The yuan closed up against the Japanese yen at 7.7604 to 100 yen from 7.7660 on Monday. It ended weaker at 1.0637 against the Hong Kong dollar compared with 1.0627. -Reuters

S.Korean won

SEOUL: A late afternoon rush of exporter deals combined with steady dollar inflows for stock investment helped South Korea's won end stronger on Tuesday.

The won closed at an intraday high of 1,116.4 per dollar, compared with on Monday's 1,118.0 close.

It opened at a low of 1,119.0 and traded below 1,117 for most of the day. "The government's interventions have kept the dollar from falling sharply but the dollar will likely fall decline further if foreign buying of shares continued," said a foreign bank dealer, referring to widespread fears about an intervention.

On Tuesday, foreign investors were estimated to have bought a net 105.9 billion won worth of local shares.

The Japanese yen, most closely watched in Korea as the two countries are severe rivals in export markets, was stable at 106.54/59 per dollar late on Tuesday after trading in a range from 106.28 to 106.69.

In the non-deliverable forward trading, six-month won stood at 1117/18 per dollar in late afternoon, compared with 1118/19 on Monday. One-year won was quoted at 1119.5/21.5 versus 1121/23. -Reuters

Philippine peso

MANILA: The Philippine peso ended steady on Tuesday but the market was wary ahead of the US Federal Reserve announcement on interest rates, dealers said.

Dealers said a 25 basis point rise in US interest rates was largely expected, but some banks and corporates bought dollars at 40.96 level in case the increase was 50 basis points.

The peso ended at 40.963 to the dollar from the close of 40.96 on Monday. It ranged from 40.945 to 40.976. Volume rose to $140 million from the previous $87 million.

"There's little chance of 50 basis points (hike) but who knows, there could be a statement on a need for further tightening," a dealer with a local bank said.The US Federal Reserve will meet later on Tuesday to decide on rates.

"The market is still long on dollars. There were a few who beefed up their positions. Even the corporates were preparing for the Fed tonight," another dealer said.

Higher US interest rates could undermine the peso since local interest rates have remained low.

Due to the peso likely having a narrower interest rate differential, investors would favour placing their funds in dollar assets, viewed as a safer haven.

The Philippine Bureau of Treasury, which sells the benchmark 91-day Treasury bills weekly, has said a 25 basis point increase should not affect local rates.

The central bank has echoed a similar sentiment, but added that a 50 basis point hike in US rates could prompt a review of its monetary policy.

The peso has been wedged in a range because the pressure from the likely Fed action was being balanced by weak corporate demand for dollars and expected dollar inflows.

Dealers said if the Fed hike fell within expectations, the peso might strengthen to as much as 40.70.

They placed the next immediate trading range at 40.90/40.95 if the Fed rate rose 25 basis points, and 40.85/41.05 if it increased 50 basis points.

"The market can smell when there is no demand (for dollars) and there is not above 41, so I think the immediate support would just be 41.05," one dealer said. -Reuters

Taiwanese dollar

TAIPEI: The Taiwan dollar ended sharply higher against the US dollar on Tuesday, but came off early highs as bargain-hunting of the greenback and central bank intervention nudged the local unit upwards.

Dealers said foreign funds showed signs of outflows in afternoon trade, which slowed the Taiwan unit's uptrend.

CLOSE: T$30.738 to the US dollar, firming from on Monday's T$30.791 close. On the smaller Cosmos market, the Taiwan dollar ended at T$30.741 compared to Monday's finish at T$30.798.

TURNOVER THROUGH DEALERS: active at US$619 million, but well below US$1.364 billion on Monday. Cosmos turnover rose to US$144 million from US$78 million on Monday.

The Taiwan dollar opened lower at T$30.799 to the US dollar, but swiftly reversed course and crept higher as a domestic stock market rebound and active US dollar sales by the central bank pushed it higher, touching as high as T$30.67.

Dealers said the buoyant Taiwan dollar, which broke the T$30.70 threshold in the morning session, ignited a wave of stop-loss US dollar selling and added further upward momentum to the Taiwan currency.

One dealer at a major domestic bank said US dollar buying from importers and ordinary people on post-election worries showed signs of abating on Tuesday as they had built sufficient positions in previous sessions.

Dealers said a rebound on the domestic stock market, which slumped 2.59 percent on Monday, also boosted sentiment for the Taiwan currency.

The benchmark TAIEX reversed early falls on Tuesday and ended up 5.49 percent, or 468.43 points, at 9,004.48 on hopes of easing Taiwan-China tensions.

For Wednesday, dealers said they expected a trading range of T$30.70-T$30.75.-Reuters