EM ASIA FX-Higher bond yields drag rupiah lower; debt sale eyed

Reuters

* Rupiah at near 4-week low on foreign banks, corp dlr bids

* Indonesia to sell 8 trln rupiah bonds

* Indonesia economy grows 5.62 pct y/y in Q3

(Adds text, updates prices)

By Jongwoo Cheon

SINGAPORE, Nov 6 (Reuters) - The Indonesian rupiah slid on

Wednesday in line with weaker bonds while India's rupee led

falls among emerging Asian currencies as a strong U.S. economic

report rekindled fears the U.S. Federal Reserve may scale back

its stimulus from next month.

The rupiah earlier fell as much as 0.6 percent to

11,410 per dollar, its weakest since Oct. 11, on selling from

foreign banks and dollar demand from local companies.

The forward onshore market, or Jakarta Interbank Spot Dollar

Rate (JISDOR), was fixed at 11,414 per dollar,

compared with the previous 11,389. Ten-, five- and three year

bond yields rose.

The Indonesian currency recovered slightly as some foreign

and local banks covered short positions before the government's

bond sale later in the day. Third quarter growth data did not

have much impact on the rupiah because the figures were in line

with expectations.

The country plans to raise 8 trillion rupiah ($704.5

million) and the auction could draw strong demand, traders and

analysts said.

"The yields Indonesia government bonds are offering are

attractive, so investors could be chasing after yields in the

short-term, as a tactical play," said Frances Cheung, senior

strategist at Credit Agricole CIB in Hong Kong.

The rupiah has been weaker on lower bond prices since late

October on a revival in expectations that the Fed may start

cutting its bond-buying programme sooner than next March.

The Indonesian currency, along with the Indian rupee

, was seen as most vulnerable to a Fed policy shift

which could reduce capital inflows many countries rely on to

fund current account deficits.

On Tuesday, an industry report showed U.S. service-sector

business activity picked up in October and firms took on

workers, an encouraging outcome in a month that saw a political

standoff force a 16-day partial government shutdown.

RINGGIT

The Malaysian ringgit fell as much as 0.5 percent

to 3.1900 per dollar as local investors bought dollars.

Malaysian government five-year bond's yield rose

to 3.501 percent from the previous session's 3.472 percent.

Three-year yield also advanced 2 basis points to

3.181 percent.

The ringgit pared some initial losses on short-covering, but

traders still preferred bearish bets on the expectation that the

Fed may scale back its stimulus this year.

The Malaysian currency is seen having room to weaken further

to 3.2032, the 38.2 percent Fibonacci retracement of its

appreciation between August and October.

PHILIPPINE PESO

The peso eased as Manila shares shed 0.6

percent, underperforming most regional stocks.

The peso, however, recovered some of its earlier losses on

bond inflows and demand from foreign funds.

Yield on the three-year government bond slid to

2.26 percent, the lowest since April 26. Five- and ten-year

yields also fell.

CURRENCIES VS U.S. DOLLAR

Change on the day at 0500 GMT

Currency Latest bid Previous day Pct Move

Japan yen 98.66 98.50 -0.16

Sing dlr 1.2427 1.2420 -0.06

Taiwan dlr 29.410 29.466 +0.19

Korean won 1060.60 1061.20 +0.06

Baht 31.27 31.24 -0.10

Peso 43.24 43.20 -0.10

Rupiah 11385.00 11345.00 -0.35

Rupee 61.91 61.63 -0.46

Ringgit 3.1800 3.1740 -0.19

Yuan 6.0958 6.0968 +0.02

Change so far in 2013

Currency Latest bid End prev year Pct Move

Japan yen 98.66 86.79 -12.03

Sing dlr 1.2427 1.2219 -1.67

Taiwan dlr 29.410 29.136 -0.93

Korean won 1060.60 1070.60 +0.94

Baht 31.27 30.61 -2.11

Peso 43.24 41.05 -5.06

Rupiah 11385.00 9630.00 -15.42

Rupee 61.91 54.99 -11.18

Ringgit 3.1800 3.0580 -3.84

Yuan 6.0958 6.2303 +2.21

($1 = 11355 rupiah)

(Additional reporting by IFR Markets' Catherine Tan; Editing by

Eric Meijer)

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