EM ASIA FX-Rupiah, peso gain slightly on dollar weakness

SINGAPORE, Aug 28 - The Indonesian rupiah and the Philippine peso rose on Friday after the dollar slipped against major currencies overnight, but gains were later cut by month-end dollar demand and on caution over stock markets.

The dollar remained on the defensive after dropping sharply against major currencies <.DXY> in late New York trading. Asian stocks edged up but Shanghai bucked the trend on worries about a fall in bank credit. [ID:nLS503138] [ID:nT90217]

Investors fear the recent rally in stocks and riskier assets may have become over-stretched.

RUPIAH

The rupiah <IDR=> gained a third of a percent to 10,130 per dollar, but it later retreated to 10,150 due to month-end dollar demand but it remained the best performing currency in Asia.

"The rupiah is just following other currencies and there is no real flow at the moment," said a Jakarta-based trader.

Three-month dollar/rupiah NDFs <IDR3MNDFOR=> eased to 10,255 implying a 1.6 percent rupiah decline from the spot compared to 2.5 percent at Thursday close.

The rupiah has been consolidating in recent sessions following its jump earlier this year buoyed by foreign investment inflows into the country's stock and bond markets.

Indonesia's central bank has cut its key policy rate steadily to 6.5 percent, but the rate remains the highest in Asia.

PESO

The peso <PHP=> rose a fifth of a percent to 48.74 per dollar, but it later pulled back to 48.80 even as traders expected some remittance inflows ahead of the long weekend.

The Philippine market will be shut on Monday for a holiday.

"The market's mindset clearly favours the dollar in the near term but it won't last long," said a Manila-based dealer. "I think the worst of the peso sell-off has passed -- the GDP number and the interest rate scenario should favour the peso going forward."

The economy dodged the recession in the second quarter, when gross domestic product grew a more-than-expected 2.4 percent from the first quarter -- the strongest performance in more than two years, official data showed on Thursday. [ID:nSP483858]

The central bank said the data justified its decision last week to end an eight-month easing cycle which analysts believe could support the peso over time.

Change on the day at 0520 GMT Currency Latest bid Previous day Pct Move Japan yen 93.65 93.47 -0.19 Sing dlr 1.4417 1.4430 +0.09 Taiwan dlr 32.862 32.916 +0.16 Korean won 1245.00 1248.70 +0.30 Baht 33.99 33.99 +0.00 Peso 48.78 48.87 +0.18 Rupiah 10150.00 10160.00 +0.10 Rupee 48.85 48.92 +0.13 Ringgit 3.5245 3.5320 +0.21 Yuan 6.8312 6.8320 +0.01 Change so far in 2009 Currency Latest bid End prev year Pct Move Japan yen 93.65 90.60 -3.26 Sing dlr 1.4417 1.4340 -0.53 Taiwan dlr 32.862 32.860 -0.01 Korean won 1245.00 1259.50 +1.16 Baht 33.99 34.80 +2.38 Peso 48.78 47.52 -2.58 Rupiah 10150.00 11000.00 +8.37 Rupee 48.85 48.71 -0.29 Ringgit 3.5245 3.4500 -2.11 Yuan 6.8312 6.8230 -0.12