EM ASIA FX-Rupiah, peso hardest hit as dollar strength bites

* Rupiah at 1-month low, prompts dlr-selling intervention

* Peso falls to 6-week low on as foreign funds cut losses

* Short dlr covering in Asia may be approaching its peak

SINGAPORE, Oct 29 - The U.S. dollar's broad strength and falling stocks pushed Asian currencies lower on Thursday, with Indonesia's central bank seen intervening in the market for the second day to smooth the rupiah's abrupt drop.

The dollar-selling by Bank Indonesia, which has been using currency strength to quell inflation, was an isolated move among Asian central bank as most monetary authorities have traditionally tried to curb currency appreciation to help exporters.

Short-term speculators, including hedge funds, have been pocketing recent gains in Asian currencies, taking advantage of the dollar rebound, traders say.

"Overall, the market is still caught short (dollars), except for a few smart funds who turned long a few days ago", a trader said.

But most analysts believe Asian currencies are poised to regain steam against the dollar as the continent's economic recovery accelerates, attracting more capital.

"I think the big short-covering has already happened," said Kayvon Alexander, strategist at Societe Generale.

"So while dollar/Asia is still quite bid, the moves are not as extreme as what we seen in some G10 countries," he said.

RUPIAH

The rupiah lost 1 percent to 9,700 per dollar, a 1-month low, as offshore players took profits on its recent rally.

Indonesia's deputy central bank governor Hartadi Sarwono said on Thursday Bank Indonesia will intervene if needed to support the rupiah.

"I think the profit-taking will not last long, some players are still looking for the right levels to buy rupiah again," said a trader in Jakarta. "BI is concerned about the volatility and is trying to cap dollar/rupiah."

Some offshore investors have sold their holdings of central bank debt in recent days to buy back dollars.

Indonesian stocks slipped 3 percent by 0535 GMT.

Three-month dollar/rupiah NDFs rose to 9,820, implying a 1.2 percent rupiah fall from the spot compared to 1.8 percent at Wednesday's close.

PESO

The peso shed 0.7 percent to 47.80 per dollar, the lowest in six weeks, as the dollar firmed broadly while stocks fell.

"Risk aversion ... is on the rise once again, dollar/peso is tracking overall dollar moves," said a Manila-based dealer. "We are looking towards Asian equities and later the euro for direction."

In the offshore market, the closely watched one-month dollar/peso NDFs rose to 47.91, implying a 0.3 percent peso fall from the spot compared to 0.6 percent on Wednesday.

"Looks like it's heading to 48.00," said a NDF trader in Singapore. "We don't think much bond selling by foreigners -- mostly seeing funds cutting losses."

BAHT

The Thai baht fell to a two-week low at 33.55 per dollar in tandem with its peers.

"The dollar is gaining temporary ground as a safe haven currency while investors move to liquidate commodity positions, especially oil and gold," said a dealer in Bangkok. "(But) the dollar rebound is not expected to last long." CURRENCIES VS U.S. DOLLAR Change on the day at 0534 GMT Currency Latest bid Previous day Pct Move Japan yen 90.37 90.62 +0.28 Sing dlr 1.4017 1.4041 +0.17 Taiwan dlr 32.579 32.496 -0.25 Korean won 1197.30 1195.40 -0.16 Baht 33.45 33.46 +0.03 Peso 47.77 47.48 -0.62 Rupiah 9670.00 9590.00 -0.83 Rupee 47.48 47.34 -0.29 Ringgit 3.4280 3.4200 -0.23 Yuan 6.8295 6.8282 -0.02 Change so far in 2009 Currency Latest bid End prev year Pct Move Japan yen 90.37 90.60 +0.25 Sing dlr 1.4017 1.4340 +2.30 Taiwan dlr 32.579 32.860 +0.86 Korean won 1197.30 1259.50 +5.20 Baht 33.45 34.80 +4.04 Peso 47.77 47.52 -0.52 Rupiah 9670.00 11000.00 +13.75 Rupee 47.48 48.71 +2.59 Ringgit 3.4280 3.4500 +0.64 Yuan 6.8295 6.8230 -0.10