EM ASIA FX-Rupiah leads Asia FX declines as steady Fed policy seen priced in


* Rupiah down on funds, month-end dollar demand

* Ringgit lower on dlr-short covering; hedge funds cut


* Asia FX trading thin ahead of Fed outcome

(Adds text, updates prices)

By Jongwoo Cheon

SINGAPORE, Oct 30 (Reuters) - The Indonesian rupiah led

declines among emerging Asian currencies on Wednesday as

investors took profits on the view that an expected Federal

Reserve decision to keep its stimulus intact was already priced

into the market.

The rupiah fell as real money funds and leveraged

funds sold it in non-deliverable forwards markets.

The currency came under more pressure from month-end dollar

demand and weaker bonds.

The Malaysian ringgit slipped as investors covered

short dollar positions.

The greenback touched a one-week high against a basket of

major currencies as investors further slashed bearish bets

before the result of the Fed's policy meeting later in the day.

The dollar had been under pressure before the meeting due to

growing expectations that the U.S. central bank will maintain

its bond-buying programme through early next year.

These expectations had lifted most emerging Asian

currencies, and investors on Wednesday opted to pocket profits

before the Fed's decision due at 1800 GMT.

OCBC Bank said investors may focus on economic fundamental

problems in Asia again.

"We caution that relative vulnerabilities within Asia have

not dissipated overnight and recent Asian currency resilience

has been a byproduct of structural dollar vulnerability, a

stabilization of risk appetite levels, and resumption of some

net portfolio flows," OCBC Bank said in a client note.

"The recent outperformance of the hitherto distressed

currencies within Asia in the past month may begin to look

slightly saturated going ahead."

Most emerging Asian currencies had enjoyed capital inflows

as the recent U.S. government shutdown cemented expectations

that the Fed will keep its stimulus longer.

Last week, the rupiah jumped 2.7 percent against the dollar,

its largest weekly gain since June 2009, according to Thomson

Reuters data.

The Indonesian currency was the worst performing Asian

currency so far this year as the country was seen one of the

most vulnerable to a Fed reduction in stimulus because of

Indonesia's sizable current account deficit.


The rupiah fell on month-end dollar demand from local

companies and as most government bond yields rose.

The ten-year yield rose to 7.152 percent from

the previous session's 7.019 percent. The five-year yield

advanced to 6.741 percent from 6.622 percent.

The forward onshore market, or Jakarta Interbank Spot Dollar

Rate (JISDOR), was fixed at 11,161 per dollar,

compared with Tuesday's 11,076.

Indonesia's trade balance is expected to have swung into

deficit in September on softer commodity prices, while inflation

in October may have ticked up due to a weaker rupiah, a Reuters

poll showed on Tuesday.

This data may put more pressure on the rupiah, traders said.


The ringgit eased in thin trading as interbank speculators

rushed to cover dollar short positions.

But the Malaysian currency pared some of initial losses on

demand from leveraged funds.

"Investors will wait for the Fed's assessment of the

economy, looking for a 'downside risk' phrase," said a senior

bank trader in Kuala Lumpur, adding that such an outlook may

help the ringgit rebound.


Change on the day at 0430 GMT

Currency Latest bid Previous day Pct Move

Japan yen 98.14 98.18 +0.04

Sing dlr 1.2394 1.2407 +0.10

Taiwan dlr 29.423 29.472 +0.17

Korean won 1060.80 1060.60 -0.02

Baht 31.06 31.05 -0.05

Peso 43.19 43.15 -0.09

Rupiah 11205.00 11085.00 -1.07

Rupee 61.54 61.31 -0.37

Ringgit 3.1540 3.1455 -0.27

Yuan 6.0922 6.0902 -0.03

Change so far in 2013

Currency Latest bid End prev year Pct Move

Japan yen 98.14 86.79 -11.57

Sing dlr 1.2394 1.2219 -1.41

Taiwan dlr 29.423 29.136 -0.98

Korean won 1060.80 1070.60 +0.92

Baht 31.06 30.61 -1.45

Peso 43.19 41.05 -4.95

Rupiah 11205.00 9630.00 -14.06

Rupee 61.54 54.99 -10.64

Ringgit 3.1540 3.0580 -3.04

Yuan 6.0922 6.2303 +2.27

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

Chris Gallagher)

View Comments (0)