EM ASIA FX-Rupee hits record low, Syria woes dent Asia FX
* Rupiah at 4-yr low before c.bank's unscheduled meeting * U.S. investors bail out of Indonesian ETFs * Philippine peso at 2-1/2-yr low as stocks down over 5 pct * Baht at 3-yr low; July factory output worse than expected (Adds text, updates prices) By Jongwoo Cheon SINGAPORE, Aug 28 (Reuters) - The Indian rupee hit a record low on Wednesday as most emerging Asian currencies tumbled, with some Southeast Asian units touching multi-year lows as regional stock markets fell to a seven-week low amid jitters over possible Western military against Syria. The rupee lost 3.7 percent to 68.75 as sharp fall in domestic shares added to concerns of foreign fund withdrawals from the equity market as well. The Indonesian rupiah touched a fresh four-year low as investors wait out a hastily-convened Bank Indonesia (BI)board meeting set for Thursday, amid speculation it will opt for another rate hike to defend the currency. "We think a 25-50 basis point policy interest rate - BI rate and the FASBI rate - hike is needed for BI to get ahead of the curve, which we believe it needs to do to persuade people that the rupiah is a good store of value," ING said in a client note. FASBI is overnight deposit facility rate. The Philippine peso fell to its weakest in more than 2 1/2 years with Manila shares tumbling more than 5 percent. The Malaysian ringgit and the Thai baht also hit a three-year low on weaker equities. Suresh Kumar Ramanathan, head of regional interest rate and FX strategy at CIMB Investment Bank, said those emerging Asian currencies are likely to fall further until their central banks loose monetary policy. "They need to ease monetary policy, not tighten," Ramanathan in Kuala Lumpur said. "Tightening of policies will exacerbate the risk of currency weakness, raise the cost of capital, further slow down the economy and induce unnecessary volatility in the debt, currency and equity markets in Asia." Regional currencies, especially the rupee and Southeast Asian units, came under severe pressure from a looming withdrawal of monetary easing by the Federal Reserve due to their deteriorating economic fundamentals. Geopolitical tensions struck another blow, with the United States and its allies gearing up for a probable military strike against Syria as punishment for last week's chemical weapons attacks blamed on President Bashar al-Assad's government. RUPIAH Spot rupiah fell 0.5 percent to 10,950 per dollar, its weakest since April 2009, even though the central bank was observed providing dollars to stabilise the currency, traders said. But the rupiah traded below 11,000 as month-end dollar demand from local companies such as importers is still strong, traders said. Jakarta shares also lost 2.7 percent. Forward markets pointed to further weakness in the rupiah with one-month non-deliverable forwards per dollar weakening to 11,698. Indonesian exchange traded funds bore the brunt of heavy redemptions from U.S. investors on Tuesday as the selloff in deficit-stricken emerging markets deepened. Investors are awaiting the central bank's announcement of the board meeting. "Raising interest rates is one of the expected outcomes," said a Jakarta-based trader. "But the rupiah may weaken until the end of 2013 or early 2014," the trader said, adding the currency is expected to weaken to 11,800-12,000 by the year-end. PHILIPPINE PESO The peso eased 0.4 percent to 44.68 per dollar, its weakest since January 2011. Foreign investors were net sellers in the Philippine stock market between Aug. 13 and Aug. 27, dumping a combined net $254 million worth of shares, according to exchange data. The Philippine currency's slide was limited on caution over possible intervention by the central bank to support the currency, and short-covering. Still, the peso is likely to weaken further as funds are moved out of the country, traders said. "We are kind at a pivot-point at the moment. If it can't hold 44.55, it will weaken more," said a Philippine bank trader in Manila, referring to the peso's value against the dollar. RINGGIT The ringgit eased 0.2 percent to 3.3340 per dollar, its weakest since June 2010, as Kuala Lumpur stocks fell 1.5 percent. The Malaysian currency earlier rebounded on short-covering and caution over potential intervention by the central bank limited its downside to around the session low. BAHT The baht slid 0.3 percent to 32.28 per dollar, its softest since August 2010, after data showing July factory output fell worse than expected. Bangkok shares lost 2.2 percent, while 10-year government bond yield rose to 4.36 percent. Five-year bond yield also advanced to 3.91 percent. But the Thai currency's downside was limited by the central bank intervention and exporters' demand for settlements, traders said. Earlier, the central bank said it was not worried about capital outflows because of the country's high foreign reserves and that the baht was still moving in line with the currencies of trade partners, but it repeated it will act if the currency moves too fast. CURRENCIES VS U.S. DOLLAR Change on the day at 0435 GMT Currency Latest bid Previous day Pct Move Japan yen 97.14 97.05 -0.10 Sing dlr 1.2834 1.2820 -0.11 Taiwan dlr 29.981 30.060 +0.26 Korean won 1117.20 1116.30 -0.08 Baht 32.25 32.17 -0.25 Peso 44.67 44.50 -0.38 Rupiah 10930.00 10900.00 -0.27 Rupee 67.86 66.24 -2.38 Ringgit 3.3325 3.3285 -0.12 Yuan 6.1209 6.1217 +0.01 Change so far in 2013 Currency Latest bid End prev year Pct Move Japan yen 97.14 86.79 -10.65 Sing dlr 1.2834 1.2219 -4.79 Taiwan dlr 29.981 29.136 -2.82 Korean won 1117.20 1070.60 -4.17 Baht 32.25 30.61 -5.09 Peso 44.67 41.05 -8.10 Rupiah 10930.00 9630.00 -11.89 Rupee 67.86 54.99 -18.96 Ringgit 3.3325 3.0580 -8.24 Yuan 6.1209 6.2303 +1.79 (Additional reporting by Karen Lema in Manila and IFR Markets' Catherine Tan; Editing by Eric Meijer)
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