Asian currencies weak on risk aversion after BoJ decision

Risk-averse investors stuck to US dollars on Thursday, pushing high-yielding Asian currencies down for a second straight day, after the Bank of Japan announced an end to five years of ultra-loose monetary policy.
Bank of Japan said it would return to a conventional monetary policy, and short-term rates would be kept around zero. It said if inflation was restrained, rates would be very low for some time.
The decision doused some expectations that Bank of Japan would announce a tighter policy, helping drag the yen to a two-week low of 118.28 per dollar and adding pressure on high-yielding currencies.
"The BoJ announcement disappointed the hawkish people in the market," said Craig Chan, currency strategist at Royal Bank of Scotland in Hong Kong.
"It now looks like it's going to be a gradual move. Rates are not going to go up in the near term. So there is no real risk of an upside for the yen in the near term."
The shift in policy also signals than an era of cheap money is coming to an end world-wide, analysts said.
The Indonesian rupiah traded at 9,360 per dollar, down 0.8 percent from late Asian trading on Wednesday.
It had dropped to 9,395 earlier in the day, extending a 1 percent decline the day before, as foreign investors dumped local bonds and switched to dollars after two Federal Reserve officials said US rates could continue to rise as a strong economy increases inflation pressures.
The Philippine peso was traded at 51.52/55 per dollar. It fell as much as 0.35 percent earlier to 51.605 per dollar, its lowest in more than a week.
The Thai baht, already pressured by political concerns surrounding calls for Prime Minister Thaksin Shinawatra to quit, fell as much as 0.4 percent to 39.31 per dollar.
The Indian rupee fell to a two-week low of 44.585 per dollar while the Malaysian ringgit dropped to a three-week low of 3.7298 per dollar.
"The risk appetite seems to have eased off a bit," Chan said.
But investors' apetite for risks could improve in the medium term if the Bank of Japan maintains it zero interest rate policy, he said.
The South Korean won closed local trading at 982.2 per dollar, little changed from Wednesday's six-week lows, after Bank of Korea left its benchmark rate unchanged, as expected, and signalled that its tightening cycle may be nearing its end.