Asian currencies weaker but yen rally helps curb losses

Asian currencies were weaker on Tuesday, weighed down by worries about the impact of high oil prices on economic growth, but trimmed some of their losses as the yen hit a seven-week high against the US currency. The Indonesian rupiah extended Monday's falls to hit its lowest level since March 2002 at about 9,920 per dollar.
Dealers said they suspected the central bank had intervened in the market to support the rupiah, helping the currency pull away from its lows.
The South Korean won and Malaysian ringgit underperformed most other Asian currencies.
The ringgit eased more than a third of a percent to 3.767 per dollar. Analysts said offshore speculators were selling the currency on expectations that the ringgit was unlikely to strengthen as much as anticipated against the dollar near term.
The Singapore dollar which hit a two-week low against the US currency overnight, and the Taiwan dollar which slipped to a one-month low earlier, pared their falls.
The yen hit a seven-week peak against the dollar on growing optimism about Japan's economy.
One Singapore-based dealer said equity flows out of Asia, excluding Japan, into the world's second-largest economy were helping the yen outperform other regional currencies.
Analysts at UBS said in a note that a decrease in the market's appetite for risk had meant that a strong run of portfolio inflows into Asia, excluding Japan, was now moderating.
"However, this is a bigger worry for economies in Southeast Asia, where declining terms of trade and higher import volumes have also meant a sharp contraction in current account surpluses," the note said.
Analysts said the technical outlook for the rupiah was bleak after the currency broke through key chart support in the 9,900 per dollar area. Dealers said suspicions of central bank intervention limited selling in the rupiah. A trader in Singapore said comments from Bank Indonesia also supported the currency. Indonesia's central bank governor said on Tuesday a government target of 9,400 rupiah per dollar in 2006 was realistic.
The rupiah has lost more than six percent of its value since the start of the year, due mainly to rising inflation and soaring oil prices, which have increased the dollar buying of state oil company Pertamina to finance oil imports.
Pertamina has bought a total of about 18.23 million barrels of oil products for September, its highest monthly volume of imports this year and 15 percent more than in August, industry sources said on Tuesday.