EM ASIA FX-Pre-Fed profit-taking weighs on Asia FX; ringgit plays catch-up

Reuters

* Rupiah falls on corporate dlr demand

* Philippine peso down on dlr short-covering

* Won eases on intervention caution

(Adds text, updates prices)

By Jongwoo Cheon

Singapore, Sept 17 (Reuters) - Most emerging Asian

currencies fell on Tuesday as investors took profits ahead of

the Federal Reserve's two-day policy meeting, at which it is

expected to start dialing down its stimulus.

The Indian rupee led regional slides and the

Indonesian rupiah fell on local corporate dollar

demand. Those currencies were seen as more vulnerable to the

Fed's policy shift due to the countries' current account

deficits.

The Philippine peso eased as investors covered

short positions in the dollar, while te South Korean won

weakened on caution over intervention.

But the Malaysian ringgit rose as domestic

financial markets were closed on Monday when its Asian peers

advanced.

The Fed may trim its $85 billion monthly bond purchase

programme by $10 billion, according to a Reuters poll.

But such expectations have been reflected in to some degree,

traders and analysts said.

Emerging Asian currencies may rise as the Fed may maintain

interest rates low as relatively dovish Fed Vice Chair Janet

Yellen became the frontrunner for the U.S. central bank top

position after former Treasury Secretary Lawrence quit the race.

"I have removed my long dollar and short Asia positions.

After the Fed, the event risk is removed and we could get a

period of 'risk-on'," said Sean Yokota, head of Asia strategy at

Scandinavian bank SEB in Singapore.

Yokota expected regional currencies, especially the ringgit,

the baht and the Philippine peso, to appreciate.

Still, some traders saw potential risks if the Fed took a

more hawkish stance.

"It is still money off the table and we should see UST

yields moving higher," said a European bank trader in Manila,

referring to U.S. Treasuries.

"Higher yields will bring the U.S. equity market higher

also. This will bring the dollar firmer against most Asian FX."

RUPIAH

The rupiah fell on dollar bids from local companies and as

forwards market pointed more weakness with its one-month

non-deliverable forwards to the dollar down to

11,380.

But the Indonesian currency spot found some support from

demand from some foreign banks, while investors stayed wary of

possible intervention by the central bank, traders said.

PHILIPPINE PESO

The peso eased as investors covered dollar-short positions,

while its downside was limited as Manila shares

outperformed with a 0.x percent gain most regional peers.

The Philippine currency failed to extend gain as investors

were lined up to sell the Philippine currency on rallies,

especially around 43.700 per dollar.

Still, the peso may rebound if the Fed scales back its

stimulus just as much as expected, traders said.

"Tapering in the amount of $10-15 billion has already been

fully priced in," said a Philippine bank trader in Manila.

"If that happens, I see the dollar being sold on the news,"

he added.

WON

The won slid as investors cut bullish bets on the currency

ahead of the Fed meeting and grew cautiious over possible

intervention by the foreign exchange authorities.

South Korean financial markets will be closed from Wednesday

to Friday for holidays.

Still, the currency found some relief as foreign investors

continued to buy Seoul shares.

"Even though intervention defends 1,080 level, I doubt how

further the won would weaken given stock inflows," said a senior

foreign bank trader in Seoul.

CURRENCIES VS U.S. DOLLAR

Change on the day at 0430 GMT

Currency Latest bid Previous day Pct Move

Japan yen 99.22 99.06 -0.17

Sing dlr 1.2639 1.2627 -0.09

Taiwan dlr 29.653 29.721 +0.23

Korean won 1085.60 1082.20 -0.31

Baht 31.75 31.70 -0.16

Peso 43.76 43.61 -0.34

Rupiah 11458.00 11360.00 -0.86

Rupee 63.52 62.83 -1.09

Ringgit 3.2620 3.2900 +0.86

Yuan 6.1210 6.1203 -0.01

Change so far in 2013

Currency Latest bid End prev year Pct Move

Japan yen 99.22 86.79 -12.53

Sing dlr 1.2639 1.2219 -3.32

Taiwan dlr 29.653 29.136 -1.74

Korean won 1085.60 1070.60 -1.38

Baht 31.75 30.61 -3.59

Peso 43.76 41.05 -6.19

Rupiah 11458.00 9630.00 -15.95

Rupee 63.52 54.99 -13.43

Ringgit 3.2620 3.0580 -6.25

Yuan 6.1210 6.2303 +1.79

(Additional reporting by; Editing by Kim Coghill)

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