EM ASIA FX-Rupiah at 4-yr low, traders say Indonesia c.bank allows one-tier FX market

Reuters

* BI allows indicative prices to match dealt levels -traders

* Asia FX higher; baht jumps on stop-loss dlr selling

* Won at 6-mth high, intervention caution limits gains

* Taiwan dlr higher on foreign financial institutions

(Adds text, updates prices)

By Jongwoo Cheon

SINGAPORE, Sept 12 (Reuters) - The Indonesian rupiah fell to

its weakest in nearly 4 1/2 years on Thursday, but traders said

the central bank allowed indicative prices to match dealt levels

-- improving dollar liquidity.

The rupiah fell as much as 1.6 percent to 11,520 per

dollar, its weakest since April 2009, on dollar demand from

local companies. Most emerging Asian currencies rose.

By letting the indicative price reflect the market price,

Bank Indonesia prompted investors to sell dollars, traders said.

The central bank was also spotted providing dollars around the

rupiah's low, they added.

Foreign banks sold the greenback, which is linked to inflows

to the country's stocks and bonds, traders said.

"Liquidity is coming back. The market is much better," said

a Jakarta-based trader, noting the rupiah had been recently

traded near 12,000 on sustained local corporate dollar demand.

Bank Indonesia often discouraged traders from posting

electronic trading platforms prices around dealt levels to curb

worries about the country's financial stabilities.

In July, the central bank had let indicative rupiah prices

on screen match traded levels but the authority prevented it

again as mounting worries about the country's current account

deficit and inflation kept dragging the rupiah weaker.

Indonesia, along with India, were seen more vulnerable than

other Asian countries to the looming reduction in the Federal

Reserve's quantitative easing because of their shortfalls in

current accounts.

Jakarta's top two officials said Indonesia is sharply

cutting inflation and starting to trim its ballooning current

account deficit, two top officials said, pointing to issues that

are testing confidence in Southeast Asia's biggest economy and

have sent its currency sliding.

Bank Indonesia took various measures to stabilise the worst-

performing emerging Asian currency of the year including a total

of 125 basis points hike in the benchmark reference rate.

The central bank is expected to keep the rate unchanged at

its policy meeting later in the day as signs of improvement may

help ease pressure on the rupiah, which has lost 16.3 percent

against the dollar so far this year.

Analysts and traders have said the authority needs to

improve dollar liquidity in the local currency market to support

the rupiah.

BAHT

The Thai baht rose as much as 1.1 percent to 31.62

per dollar, its strongest since Aug. 20 on stop-loss dollar

selling.

The greenback fell to two-week low against a basket of major

currencies on growing doubts the Fed will scale back its

bond-buying programme in any significant way next week.

The baht found more support from equity inflows and foreign

demand, traders said.

WON

The South Korean won gained 0.5 percent to

1,081.5 to the greenback, its strongest since Feb. 28.

Foreign investors continued to buy Seoul shares,

while offshore funds bought the won, traders said.

But increasing caution over suspected intervention by the

foreign exchange authorities limited the won's upside, traders

added.

"It looks better to buy the won on dips, but I don't expect

it to go to the 1,070 level," said a foreign bank trader in

Seoul.

"In addition to the authorities, there is other demand

around 1,080 on expectations that level would be kept."

The won shrugged off the central bank's decision to maintain

interest rates on hold for a fourth consecutive month, as widely

expected.

TAIWAN DOLLAR

The Taiwan dollar advanced on demand from foreign

financial institutions.

The island's currency found more support as China's central

bank fixed the yuan's mid-point at its highest since the

landmark revaluation in 2005.

Still, investors stayed wary of potential intervention by

Taiwan authorities, while foreign financial institutions'

inflows were smaller than recent days, traders said.

CURRENCIES VS U.S. DOLLAR

Change on the day at 0430 GMT

Currency Latest bid Previous day Pct Move

Japan yen 99.52 99.88 +0.36

Sing dlr 1.2674 1.2655 -0.15

Taiwan dlr 29.676 29.828 +0.51

Korean won 1082.40 1086.50 +0.38

Baht 31.71 31.96 +0.79

Peso 43.78 43.79 +0.03

Rupiah 11500.00 11330.00 -1.48

Rupee 63.16 63.38 +0.35

Ringgit 3.2660 3.2635 -0.08

Yuan 6.1184 6.1185 +0.00

Change so far in 2013

Currency Latest bid End prev year Pct Move

Japan yen 99.52 86.79 -12.79

Sing dlr 1.2674 1.2219 -3.59

Taiwan dlr 29.676 29.136 -1.82

Korean won 1082.40 1070.60 -1.09

Baht 31.71 30.61 -3.47

Peso 43.78 41.05 -6.23

Rupiah 11500.00 9630.00 -16.26

Rupee 63.16 54.99 -12.94

Ringgit 3.2660 3.0580 -6.37

Yuan 6.1184 6.2303 +1.83

(Additional reporting by Miao-jung Lin in TAIPEI, KyoungHo Lee

in SEOUL and IFR Markets' Catherine Tan; Editing by Eric Meijer)

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