EM ASIA FX-Less dovish Fed weighs on Asia FX, but region to see monthly gains

Reuters

* Rupiah falls 1 pct on weaker stocks, bonds

* Won firmer after U.S. Treasury report

* S.Korea still suspected of intervening

(Adds text, updates prices.)

By Jongwoo Cheon

SINGAPORE, Oct 31 (Reuters) - Most emerging Asian currencies

fell on Thursday as the Federal Reserve's steady stance

disappointed some expectations of more dovish comments,

prompting investors to book profits from monthly gains in

regional units.

The Indonesian rupiah and the Philippine peso

led the daily depreciation. Malaysia's ringgit also

slid as investors cut bullish bets on the best performing

emerging Asian currency in October.

The South Korean won, however, edged higher after

a U.S. Treasury report urged Asia's fourth-largest economy to

refrain from targeting exchange rate.

The Fed on Wednesday decided to keep buying $85 billion in

assets a month and sounded only slightly less optimistic about

growth. However, it dropped a phrase expressing concern about a

run-up in borrowing costs, suggesting it was comfortable with

interest rates at their current level.

Traders of rate futures kept bets in place that the U.S.

central bank will wait to raise rates until at least April 2015.

Emerging Asian currencies are unlikely to extend gains in

November as expectations of steady U.S. monetary policy have

been widely priced in, traders and analysts said.

"Asian currencies may lose appreciation momentum. They have

reflected the Fed's policy, but they have not priced in possible

rebound in the U.S. economy," said Yuna Park, a currency and

bond analyst at Dongbu Securities in Seoul.

"It may be better to reduce Asia FX positions on rallies

rather than to add more. Some Asian stocks are seen overbought,"

Park added.

In October, emerging Asian currencies are poised to see

monthly gains.

The ringgit has risen 3.2 percent against the dollar, which

would be the largest monthly gain since January 2012, according

to Thomson Reuters data. Investors welcomed the government's

plans to tackle a fiscal deficit including a new consumption

tax.

The rupiah has advanced 2.6 percent on capital inflows.

Indonesia was seen one of the most vulnerable to the Fed's

possible cut in the bond-buying programme due to the country's

current account deficit.

The Indian rupee has gained 2.0 percent, while both

the Singapore dollar and the won have been

up 1.4 percent.

The Philippine peso has risen 0.6 percent.

RUPIAH

The rupiah fell as bond yields extended rises and stocks

underperformed most of regional peers.

The five-year bond yield rose to 6.883 percent

from the previous day's 6.748 percent, while three-year yield

advanced to 6.742 percent from 6.645 percent.

Month-end dollar demand also put pressure on the rupiah,

traders said.

"The rupiah is still vulnerable," said a Jakarta-based

trader, adding the trader has already built up short positions

in the rupiah around 11,000 to the dollar.

Investors are awaiting September trade and October inflation

data due on Friday. The country's trade balance is expected to

have swung into deficit in September, while inflation in October

may have ticked up, a Reuters poll showed.

Another currency trader in Jakarta said some investors may

look for chances to buy the rupiah on dips due to some hopes

that those economic indicators may be better than expected.

PHILIPPINE PESO

The peso fell 0.4 percent to 43.29 per dollar, its weakest

since Oct. 10, as interbank speculators covered dollar-short

positions before a long weekend.

The Philippine financial markets will be closed on Friday

for a holiday.

Local bond yields also rose, putting pressure on the peso.

WON

The won edged up on exporters' month-end demand and after a

U.S. Treasury report urged South Korea to refrain from targeting

the exchange rate and only resort to intervention under

"exceptional circumstances."

Morgan Stanley said it prefers the won on the possibility of

increased political pressure.

"We remain short (dollar/won), looking for an eventual break

of the post-Lehman low of 1,048 to open the way for a move

towards 1,000," Morgan Stanley said in a client note.

The won's upside, however, was limited as South Korea's

foreign exchange authorities were suspected of buying dollar to

stem its appreciation, traders said.

A South Korean foreign exchange official said that the

authorities had no plans to change their exchange rate stance.

Traders hesitated to chase the won around current levels.

"The authorities carried out only smoothing operation," said

a senior foreign bank trader in Seoul, referring to the

authorities' actions to limit volatility.

"Despite exporters' demand, it is difficult for interbank

players to buy the won here."

CURRENCIES VS U.S. DOLLAR

Change on the day at 0440 GMT

Currency Latest bid Previous day Pct Move

Japan yen 98.41 98.53 +0.12

Sing dlr 1.2390 1.2393 +0.02

Taiwan dlr 29.375 29.475 +0.34

Korean won 1059.55 1060.20 +0.06

Baht 31.08 31.06 -0.06

Peso 43.27 43.10 -0.38

Rupiah 11280.00 11165.00 -1.02

Rupee 61.35 61.24 -0.18

Ringgit 3.1565 3.1485 -0.25

Yuan 6.0950 6.0938 -0.02

Change so far in 2013

Currency Latest bid End prev year Pct Move

Japan yen 98.41 86.79 -11.81

Sing dlr 1.2390 1.2219 -1.38

Taiwan dlr 29.375 29.136 -0.81

Korean won 1059.55 1070.60 +1.04

Baht 31.08 30.61 -1.51

Peso 43.27 41.05 -5.12

Rupiah 11280.00 9630.00 -14.63

Rupee 61.35 54.99 -10.36

Ringgit 3.1565 3.0580 -3.12

Yuan 6.0950 6.2303 +2.22

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

Kim Coghill)

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