Asian currencies: ringgit hits 14-week low

The Indonesian rupiah and Philippine peso slipped further on Wednesday as investors cut riskier positions amid worries about the US subprime mortgage market, while the Malaysian ringgit hit a 14-week low.
The rupiah stabilised near 9,110 per dollar after weakening as far as 9,145, which was about 0.8 percent down from late Asian trade on Tuesday and a two-week low. The peso also found support near 46.5 per dollar in late trade after dipping 0.6 percent to 46.64 per dollar.
Falling stock markets, in part reflecting concerns about the exposure of US lenders to subprime mortgages in a declining housing market, have dented demand for risky assets. Such concerns and a warning against one-way bets by Japan's finance minister Koji Omi on Tuesday also crimped investor appetite for yen carry trades and boosted the Japanese currency.
But analysts remain optimistic that the latest turbulence would not derail the longer-term advances in Asian currencies. "I doubt it's a long-term development," said Magnus Prim, chief Asian currency strategist at SEB. "Being subprime market or some other reasons, there will be from time to time factors that trigger risk aversion and trigger unwinding of carry positions," he said.
The rupiah, now the second worst-performing currency in Asia after the Japanese yen, has shed more than 4 percent over the past month reflecting concerns Indonesian rates were falling when global interest rates were on the way up, while the peso has lost more than one percent.
Fears about fallout from the US subprime mortgage market took a toll on Asian stock and bond markets on Wednesday. The MSCI index of Asian stocks outside Japan, which hit a record high on Friday, shed nearly 1.5 percent. The volatile conditions on Asia's bond market forced Malaysia's MISC Bhd, the world's largest carrier of liquefied natural gas, to postpone its bond issue.
The Malaysian ringgit fell as far as 3.49 per dollar, down almost 0.5 percent and hitting a 14-week low. "Maybe some money is going out from Malaysia, it spooked the market a little bit," said a dealer in Kuala Lumpur. Investors have scaled back their extended long ringgit positions, disappointed it has not risen as fast as they had expected after officials had expressed tolerance for a stronger currency.
"Clearly the market was very long ringgit and was quick to bail out when the tide turned," Sean Callow, currency strategist at Westpac, said in research note. But Callow expected the ringgit to recover and rise to 3.37 per dollar by the end of September and 3.32 per by the year-end. The Chinese yuan and the Thai baht were relatively resilient in the face of falling risk appetite.
The yuan steadied near 7.6168 per dollar after hitting a post-revaluation high of 7.6135 hit on Tuesday, while the baht was little changed at 34.52 per dollar.