The Indonesian rupiah and Philippine peso hit multi-week lows on Friday as investors took profits from a recent market rally amid lingering doubts about the strength a recovery in the global economy. Suspected central bank intervention set a floor for the rupiah and boosted the peso, as the dollar held to light gains against major currencies after US bond yields rose on Thursday due to some encouraging data.
RUPIAH: The Indonesian rupiah fell just over 1 percent to 10,400 per dollar, its lowest in a month, as investors took profits on a recent rally in stocks and bonds. "Investors are taking profits ahead of the July election. If the election result is positive, they will come back again," says a trader in Jakarta.
Indonesian President Susilo Bambang Yudhoyono, who has picked former central bank governor Boediono as his vice president candidate, is ahead in the opinion polls in the run-up to the July 8 presidential election. Their win in the election would be welcomed by the market.
Some traders suspected the central bank had intervened by selling dollars to support the rupiah, which has shed more than 4 percent since June 5. Three-month dollar/rupiah non-deliverable forwards (NDFs) rose to 10,800, implying a 3.7 percent rupiah fall from the spot, little changed from Thursday.
PESO: The Philippine peso lost a fifth of a percent to 48.575 per dollar, a seven-week low, as investors dumped local stocks amid concerns about the country's economic outlook and government finances. It later firmed to 48.45, to stand slightly higher on the day.
"The pair broke through 48.50 resistance after BSP (the central bank) failed to keep that level," said a Manila-based dealer. A second trader also suspected the central bank had sold dollars near 48.55 to support the peso, which has fallen almost 4 percent so far this month. Meanwhile, three-month dollar/peso NDFs eased slightly to 49.07, implying a 1.3 percent peso fall from the spot compared to 1.7 percent on Thursday.