EM ASIA FX-Rupee hits record low, Syria woes dent Asia FX

Wed Aug 28, 2013 11:20am IST

* 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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