EM ASIA FX-Ringgit up on short-covering before budget; China PMI lifts Asia FX
* Ringgit rises on hedge funds
* Rupiah hits six-week high on inflows
* Singapore dlr up, but local investors take profits
(Adds text, updates prices)
By Jongwoo Cheon
SINGAPORE, Oct 24 (Reuters) - The Malaysian ringgit rose on
Thursday as some investors hoped the government may deliver
measures to improve the fiscal deficit, while Indonesia's rupiah
led gains among emerging Asian currencies on a survey showing
solid growth in Chinese manufacturing.
The ringgit advanced as much as 0.7 percent to
3.1460 per dollar on demand from hedge funds and as other
investors reduced bearish bets on the Malaysian currency.
Prime Minister Najib Razak will trim the government's hefty
subsidy bill and likely announce a new consumption tax on Friday
as he delivers a budget seen as crucial to ward off a possible
credit downgrade and reassure investors over the Southeast Asian
country's fast-growing debt burden.
But the 2014 budget is unlikely to make drastic cuts to
subsidies that take up about a fifth of government spending, or
include deeper reforms such as reducing a bloated, but
politically influential, civil service.
The ringgit lost 0.2 percent against the dollar in the first
three days of the week, underperforming most emerging Asian
currencies, according to Thomson Reuters data.
Some analysts and traders said the Malaysian currency priced
in some hopes that the fiscal deficit issues would be addressed.
"Over the past month, politics in Malaysia and the U.S.
appeared to have switched places," said Philip Wee, a currency
strategist at DBS Bank in Singapore.
"After the UMNO elections, Malaysia appears to be getting
its act together, and is now better positioned to address the
fiscal concerns raised by Fitch," Wee said, referring to the
internal elections of the ruling United Malays National
Organisation last weekend.
The United States, on the other hand, is kicking the can
down the road on the debt ceiling deadline again because of
divisive politics on Capitol Hill, he added.
Najib aims to trim the fiscal gap from 4.5 percent of gross
domestic product in 2012 to 4 percent in 2013 and 3.5 percent in
2014 before returning to a surplus by around 2020.
Maybank said the ringgit may strengthen to 3.0770, if
Najib's announcement on Friday meets market expectations such as
the introduction of a Goods and Services Tax (GST) of 4 percent
in 2015.
If not, the Malaysian currency is seen weakening to 3.2500,
it added in a client note.
For now, the ringgit faces chart resistance at its 200-day
moving average of 3.1403.
RUPIAH
The rupiah rose as much as 0.7 percent to 11,188
per dollar, its strongest since Sept. 10, on capital inflows.
Indonesian stocks rose 0.5 percent, outperforming
most regional bourses. Most government bond yields fell with
10-year yields down at 7.151 percent, the lowest
since July 1.
Month-end dollar demand, which had put pressure on the
rupiah, eased, traders said.
"Most companies got dollars when it was above 11,300," said
a Jakarta-based trader.
The rupiah is seen heading to 11,150, he added.
SINGAPORE DOLLAR
The Singapore dollar gained on a
stronger-than-expected Chinese manufacturing performance in
October.
Strong new orders drove the fastest expansion in China's
manufacturing sector in seven months in October, a preliminary
survey showed, more evidence that the economy is stabilising
although a strong rebound remains elusive.
Some local investors took profits from the city-state's
currency, limiting its upside, amid a further spike in Chinese
money-market rates.
"It looks good to cover short U.S. dollar/Singapore dollar
positions around 1.2350," said a foreign-bank trader in
Singapore.
"Still, I don't think investors such as real money funds
would buy the pair on rallies but sell it."
CURRENCIES VS U.S. DOLLAR
Change on the day at 0430 GMT
Currency Latest bid Previous day Pct Move
Japan yen 97.32 97.39 +0.07
Sing dlr 1.2370 1.2390 +0.16
Taiwan dlr 29.386 29.425 +0.13
Korean won 1055.00 1055.80 +0.08
Baht 31.13 31.14 +0.02
Peso 43.11 43.11 +0.00
Rupiah 11180.00 11265.00 +0.76
Rupee 61.48 61.59 +0.19
Ringgit 3.1520 3.1680 +0.51
Yuan 6.0820 6.0835 +0.02
Change so far in 2013
Currency Latest bid End prev year Pct Move
Japan yen 97.32 86.79 -10.82
Sing dlr 1.2370 1.2219 -1.22
Taiwan dlr 29.386 29.136 -0.85
Korean won 1055.00 1070.60 +1.48
Baht 31.13 30.61 -1.67
Peso 43.11 41.05 -4.78
Rupiah 11180.00 9630.00 -13.86
Rupee 61.48 54.99 -10.55
Ringgit 3.1520 3.0580 -2.98
Yuan 6.0820 6.2303 +2.44
(Additional reporting by IFR Markets' Catherine Tan; Editing by
Chris Gallagher)
