Rupiah tumbles in broad Asia FX selloff

SINGAPORE: The dollar surged to its highest in more than six months against the Indonesian rupiah on Wednesday as dollar short-covering by hedge funds and real money outflows picked up steam.

Emerging Asian currencies fell broadly as jitters over the euro zone's sovereign debt crisis prompted investors to cut back on their risky bets.

"Looks like market panicking over offshore events," said a dealer for a European bank in Jakarta, confirming that overseas real money investors were among the players that pushed the dollar higher against the rupiah.

The Jakarta-based dealer said the dollar was traded as high as 8,840 to the rupiah via brokers, the greenback's highest since late February, adding the dollar may have traded at higher levels in direct deals between banks.

Among other milestones hit were a two-year low for the Indian rupee at 48.02, a nine-month low for the Malaysian ringgit at 3.0880 and a five-month trough for the South Korean won at 1,107.9.

"Given the strengthening risk-off moves in major currencies...it is natural to see some unwinding of risk-taking positions (in Asian currencies)," said a trader for a major Japanese bank in Singapore.

"I doubt we will see the situation in Asia deteriorate so much that it will be in worse shape compared to the United States and Europe. It's probably best to view these moves as a bit of catching up," the trader added.

Traders cited talks regarding dollar-selling intervention by central banks in Indonesia and Malaysia, and one trader said there was also talk of dollar-selling by central banks in South Korea and the Philippines.

RINGGIT

The dollar rose to as high as 3.0880 to the ringgit, the dollar's highest since December 2010, with real money investors spotted covering short dollar positions.

Traders said Malaysia's central bank was suspected of selling dollars, with agent banks cited as dollar sellers.

SINGAPORE DOLLAR

The greenback rose to 1.2514 versus the Singapore dollar at one point, the US currency's highest since late May.

Marco and real money funds actively covered their short dollar positions and interbank speculators also scrambled for cover, traders said.

Copyright Reuters, 2011