May 30, 2012 / 4:52 AM / 5 years ago

EM ASIA FX-Hit by Spain bank worries; rupiah weaker

SINGAPORE, May 30 (Reuters) - Emerging Asian currencies
slipped on Wednesday as investors cut risky assets on escalating
worries about Spain's banking sector, while Bank Indonesia's
intervention and a dollar term deposit plan failed to arrest a
slide in the rupiah.	
    Risk worries also restrained the peso's gains after
Tuesday's rating outlook upgrade by Moody's Investors Service as
interbank speculators continues to sell the currency and on
fixing-related dollar demand.	
    "Path of least resistance for USD/Asia FX we think is still
up given that the risk appetite decline has grown pervasive,"
said Emmanuel Ng, foreign exchange strategist at OCBC Bank in
Singapore.	
    Separately, the bank said in a note: "Alarm towards EM
markets continues to mount with risk premiums blowing out and
(we) expect potential USD strength to remain very much a
dominant feature in the near-term."	
     A government source told Reuters on Tuesday that Spain
would likely recapitalise Bankia, which asked for 19
billion euros on Friday, by issuing new debt and possibly
drawing cash from the bank restructuring fund and Treasury
reserves. 	
    The 10-year Spanish government bond yield hit a six-month
high on Tuesday, with the sell-off in the country's debt having
driven up their risk premium over safe haven German Bunds to
euro-era highs this week. 	
    That pushed the euro to a two-year low and dented
Asian shares on Wednesday. The Australian dollar fell
after weaker-than-expected retail sales. 	
    The rupiah fell on month-end dollar demand from
Indonesian corporations and as foreign banks kept selling the
local currency.	
    Dollar/rupiah's indicative price rose 1.8 percent to 9,550,
but market prices were higher with some quotes above 9,600,
according to dealers.	
    The central bank has been spotted selling the pair from
9,420 to 9,580 to select banks, dealers said. Bank Indonesia's
intervention may calm the rupiah market, some dealers said.	
    "The central bank keeps supplying USD and it is estimated to
inject $500 million-$600 million a day recently. Quite a bit of
USD demand has been met by now," said a Jakarta-based dealer.	
    "Demand by foreign banks is still there but it is slowing
down a bit," the dealer added.	
    But investors did not expect an immediate remedy for the
rupiah from the central bank's plan of dollar term deposits in
short term. 	
    Another trader in Jakarta said rates offered for the
deposits must be higher than market rates to be effective.	
    The Thai baht fell to 31.815 per dollar, the
weakest since Jan. 18 on dollar demand from gold related
investors and interbank players, dealers said.	
    The baht may weaken further, probably to 31.920, the low of
Jan. 16, as worries about Spain's borrowing costs are likely to
keep denting risk appetite. But that level may offer strong
technical resistance, analysts said.	
    	
  CURRENCIES VS U.S. DOLLAR   	
  Change on the day at 0400 GMT	
  Japan yen        79.42          79.49       +0.09
  Sing dlr        1.2800         1.2782       -0.14
  Taiwan dlr      29.697         29.645       -0.18
  Korean won     1178.40        1174.80       -0.31
  Baht             31.79          31.71       -0.25
  Peso             43.50          43.22       -0.64
  Rupiah         9550.00        9380.00       -1.78
  Rupee            56.16          55.67       -0.87
  Ringgit         3.1580         3.1570       -0.03
  Yuan            6.3554         6.3480       -0.12
 
  Change so far in 2012
  Currency    Latest bid  End prev year    Pct Move
  Japan yen        79.42          76.92       -3.15
  Sing dlr        1.2800         1.2969       +1.32
  Taiwan dlr      29.697         30.290       +2.00
  Korean won     1178.40        1151.80       -2.26
  Baht             31.79          31.55       -0.75
  Peso             43.50          43.84       +0.78
  Rupiah         9550.00        9060.00       -5.13
  Rupee            56.16          53.08       -5.48
  Ringgit         3.1580         3.1685       +0.33
  Yuan            6.3554         6.2940       -0.97
 	
(Reporting by Jongwoo Cheon, additional reporting by IFR
Markets' Catherine Tan; Editing by Ramya Venugopal)	
 	
   	
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