Emerging FX-Asia gains on Fed rate views, peso at 2-week high

SINGAPORE, June 18 (Reuters) - Asian currencies extended
their gains on Wednesday, led by the Philippine peso, as
investors raised their long bets on regional currencies amid
doubts over how much the Federal Reserve might raise interest
rates this year.

Asian currencies were still finding support from recent
weakness in the U.S. dollar. The latest blow for the U.S.
dollar came on Tuesday with data showing U.S. housing starts
fell to a 17-year low.

The Philippine peso PHP= firmed early to hit a two-week
high at 44.05 per dollar, up about 0.4 percent from Tuesday's
close. Traders suspected the central bank was intervening by
buying dollars to smooth currency volatility.

"The dollar/peso is down because the U.S. dollar remains
weak on the back of tempered expectations for U.S. interest
rate hikes on account of a weak U.S. economy," a trader in
Manila said.

"There is intervention, the BSP (central bank) is suspected
to be buying dollar from 44.05 to 44.10," said the trader.

Central banks in the Philippines, South Korea, India and
Indonesia had in recent weeks sold dollars to support their
currencies out of fear that their weakness could stoke
inflation.

Reports this week suggested market expectations for U.S.
rate hikes this year had become too strong, leading investors
to cut back on their expectations for a Federal Reserve rate
rise in August. [ID:nN17614345]

The Chinese yuan CNY=CFXS gained a tenth of a percent to
6.8820 per dollar, its highest since the currency's revaluation
in July 2005.

The yuan was guided to its high by the central bank, which
set the currency's mid-point at a post-revaluation high for the
second consecutive day.

Other currencies were firmer on the back of the yuan.

"Dollar/yuan signals, we think, will not deviate from the
underlying bearish trend and this should help weigh on some of
the regional pairings," said a Forecast research note.

The Malaysian ringgit MYR= rose 0.4 percent to a two-week
high at 3.233 against the dollar, taking its gains so far this
week to 1.3 percent.

The ringgit firmed in line with the Singapore dollar
SGD=, which rose by a fifth of a percent to 1.3644 per U.S.
dollar, its highest in just over a week. The Singapore dollar
has gained a percent since Monday.

The Indonesian rupiah IDR= rose 0.2 percent to 9,280 and
touched a one-month high. Dealers also suspected authorities
intervened to buy dollars to cap the rise in the rupiah.

"The market has gone long rupiah with the uncertainty from
the U.S. Fed in raising their interest rates, so the market
prefers to go long on rupiah and buy SBI (Bank Indonesia
Certificates)," said a trader in Jakarta.

"I think the range for the rupiah today will be 9,250 to
9,320," he said.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0255 GMT
Currency Latest bid Previous day Pct Move
Japan yen 107.92 107.77 -0.14
Sing dlr 1.3656 1.3670 +0.10
Taiwan dlr 30.275 30.317 +0.14
Korean won 1022.10 1023.40 +0.13
Baht 33.08 33.14 +0.18
Peso 44.04 44.24 +0.45
Rupiah 9280.00 9301.00 +0.23
Rupee 42.89 42.89 +0.00
Ringgit 3.2400 3.2475 +0.23
Yuan 6.8824 6.8915 +0.13
Change so far in 2008
Currency Latest bid End prev year Pct Move
Japan yen 107.92 111.33 +3.16
Sing dlr 1.3656 1.4382 +5.32
Taiwan dlr 30.275 32.443 +7.16
Korean won 1022.10 935.70 -8.45
Baht 33.08 33.68 +1.81
Peso 44.04 41.28 -6.27
Rupiah 9280.00 9390.00 +1.19
Rupee 42.89 39.41 -8.10
Ringgit 3.2400 3.3050 +2.01
Yuan 6.8824 7.3041 +6.13

(Reporting by Melissa Chia; Editing by Neil Fullick)