Asian currencies: rupiah falls

The high-yielding Indonesian rupiah fell and the Malaysian ringgit slipped on Tuesday as renewed concerns about the US mortgage industry forced investors to once again reduce risky positions.
The yen too rallied overnight, showing that traders and fund managers were reviewing carry trades, in which they borrow cheap yen to invest in other high-yielding assets.
Traders said they feared that a global sell-off in equity markets and other high-yielding assets, which seemed to have abated last week, had resumed. "This is a continuation from where we left off two weeks ago. The yen's recovery is no coincidence," said one Singapore-based trader.
The Indonesian rupiah shed 0.4 percent, retreating to levels near 9,200 per dollar it had traded last week. The Philippine peso also fell a quarter of a percent to around 48.50 per dollar.
The Malaysian ringgit fell 0.15 percent to 3.5 per dollar. The Chinese yuan was steady, despite economists' expectations that the currency should appreciate faster after Monday's trade data. That data showed China had a trade surplus of $23.76 billion for February, three times bigger than expected.
A Jakarta-based trader said much of the rupiah selling was driven by offshore players who seemed to have lost interest in holding on to Indonesian government bonds.
"Looks like this is an unwinding of dollar/Asian positions," another trader said. US and European stock markets were weighed down overnight by worries over US subprime mortgages. New Century Financial Corp, one of the largest US subprime lenders, said on Monday its lenders were planning to cut off its financing. Countrywide Financial Corp, the biggest US mortgage company, said its subprime exposure may result in earnings volatility.
One options trader said players were selling implied currency volatilities on the emerging Asians, on the view that the stock market rout had ended and risk appetite would return. But by late Asian trading, even Asia's safe-haven currencies such as the Singapore dollar were being sold.
The Sing dollar fell to 1.5290 from a 1.5265-1.5270 per US dollar level it had held since Monday. "The Sing dollar will behave as a low-yielder. It might appreciate a tinge if risk-aversion comes back," a trader said.
Interbank rates in Singapore are just around 3 percent for a month, far below the 9 percent yields in Indonesia and levels of between 4.5 and 5 percent in South Korea.
Asian currencies had rallied on Monday after Friday's strong US jobs data allayed concerns over any weakness in the US economy and rate cuts by the Federal Reserve. But traders said the market would remain edgy ahead of more data from the United States, including retail sales on Tuesday and consumer price data later this week.