* S.Korea says has not discussed FX swap with Indonesia
* Rupiah falls on foreign banks, local corp dlr demand
* Ringgit lower on dlr short-covering
(Adds text, updates prices)
By Jongwoo Cheon
SINGAPORE, Sept 27 (Reuters) - The Indonesian rupiah and the
Malaysian ringgit led weakness among emerging Asian currencies
on Friday as worries about fiscal and monetary policy in the
United States kept investors away from riskier assets.
Most regional units posted losses on the week.
The rupiah slid after South Korea on Thursday
denied it was in talks with Indonesia on a bilateral currency
swap deal, in response to repeated remarks by Jakarta officials
that an agreement would be signed soon.
The ringgit eased on dollar-short covering in thin
trading after a report showing U.S. jobless claims fell last
week, renewing some expectations that the Federal Reserve may
scale back its stimulus soon.
Still, some analysts said a tapering move by the Fed may not
be imminent, given political uncertainty over U.S. budget
"It is unlikely to see October tapering due to conflicts
among U.S. lawmakers over the budget," said Jeong My-young,
Samsung Futures research head in Seoul.
"A potential government shutdown may be negative to risky
assets including Asian currencies. But we have experienced it
before, so the impact would be limited," Jeong added.
Most emerging Asian currencies were set to see weekly losses
as U.S. House of Representatives Republicans on Thursday refused
to give in to President Barack Obama's demand for
straightforward bills to run the government beyond Sept. 30 and
to increase borrowing authority to avoid a default.
For the week, the ringgit was the worst performing emerging
Asian currency with a 1.7 percent slide against the dollar,
according to Thomson Reuters data.
The Malaysian currency was the top gainer in the previous
week when regional units rallied as the Fed unexpectedly
maintained its monetary stimulus.
The rupiah has fallen 1.4 percent, while the Thai baht
has lost 0.8 percent.
The Philippine peso has slid 0.6 percent and the
Singapore dollar has eased 0.3 percent.
The rupiah fell as foreign banks cut long positions after
South Korea said it is not in discussions on a currency swap
arrangement with Indonesia.
Local banks also bought dollars on behalf of local
companies, traders said.
The Indonesian currency may stay under pressure, but it is
likely to find support at 11,600 per dollar on possible
intervention by the central bank, traders added.
Investors are keeping an eye on economic data next week,
especially August trade figures due on Tuesday for any signs
that the country's trade deficit may be easing.
A Jakarta-based trader said trade deficit would be smaller
than July's record shortfall of $2.31 billion.
The rupiah is expected to trade in a range between 11,600
and 11,400, the trader added.
The ringgit slid in thin trading with higher 3-year
government bond yield.
Malaysia will sell 2.5 billion ringgit ($777.7 million)
government bonds maturing on Sept. 30, 2043.
Foreign investors may not show strong interest in the bonds,
an Asian bank trader in Singapore.
"Offshore investors are unlikely to have any interest since
it's the first time and liquidity will be bad in the secondary
market," he said.
In addition to such an expectation, U.S. uncertainties are
likely to put pressure on the ringgit next week, a senior
Malaysian bank trader in Kuala Lumpur.
The trader was looking to sell the ringgit on rallies for a
target of 3.3000 per dollar.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0440 GMT
Currency Latest bid Previous day Pct Move
Japan yen 98.72 99.02 +0.30
Sing dlr 1.2556 1.2549 -0.06
Taiwan dlr 29.572 29.673 +0.34
Korean won 1074.40 1075.10 +0.07
Baht 31.20 31.18 -0.06
Peso 43.33 43.25 -0.17
Rupiah 11522.00 11450.00 -0.62
Rupee 61.92 62.07 +0.24
Ringgit 3.2200 3.2145 -0.17
Yuan 6.1208 6.1214 +0.01
Change so far in 2013
Currency Latest bid End prev year Pct Move
Japan yen 98.72 86.79 -12.08
Sing dlr 1.2556 1.2219 -2.68
Taiwan dlr 29.572 29.136 -1.47
Korean won 1074.40 1070.60 -0.35
Baht 31.20 30.61 -1.89
Peso 43.33 41.05 -5.25
Rupiah 11522.00 9630.00 -16.42
Rupee 61.92 54.99 -11.19
Ringgit 3.2200 3.0580 -5.03
Yuan 6.1208 6.2303 +1.79
($1 = 3.2145 ringgit)
(Editing by Kim Coghill)