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
losses
* 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.
RUPIAH
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.
RINGGIT
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.
CURRENCIES VS U.S. DOLLAR
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)
