SINGAPORE: The Malaysian ringgit rose to its highest in more than five weeks on Wednesday, leading gains among emerging Asian currencies, as investors bet the U.S. Federal Reserve would scale back its monetary stimulus only modestly later in the day.
    The ringgit advanced on real money funds demand.
The Taiwan dollar gained on exporters' bids, while the
Philippine peso hit a near six-week high on
expectations of stock inflows.
    But the Indonesian rupiah bucked the trend on
sustained dollar demand from local companies.
    The Fed is set to announce the result of its two-day policy
meeting later in the day and investors expect it will trim $10
billion of its $85 billion monthly bond-buying programme.
    The U.S. central bank may also seek to reassure markets that
actual policy tightening is still far away.
    "If accompanied by rhetoric from Bernanke to try to keep a
lid on yields, then dollar/majors should emerge weaker," said
Jonathan Cavenagh, a senior FX strategist at Westpac in
Singapore, referring to Fed Chairman Ben Bernanke.
    Emerging Asian currencies are also seen appreciating,
although they have already priced the Fed reduction in to some
degree, he added.
    Recent weak U.S. economic data caused investors to expect
the Fed may dial down the quantitative easing less than
initially feared.
    
    RINGGIT
    The ringgit rose as much as 0.6 percent to 3.2300 per
dollar, its strongest since Aug. 12, on demand from real money
funds.
    The Malaysian currency gave up some of initial gains as
importers bought dollars for payments on dips and on caution
before the Fed's announcement at 1800 GMT and Bernanke's news
conference soon afterwards.
    But current ringgit levels already have reflected the Fed's
cut in its stimulus to some degree, traders said.
    "We might see dollar/Asia lower because a $10 billion taper
is already quite priced in," said an Asian bank trader in
Singapore.
    "There is a risk that Bernanke might change the 6.5 percent
unemployment target to 6 percent to warrant a rate hike because
they want to keep the long-end yields low," he added.
    
    TAIWAN DOLLAR
    The Taiwan dollar advanced as exporters bought the island's
currency for settlements before holidays.
    Those companies also purchased the Taiwan dollar, with some
expectations that it may strengthen further if the Fed reduces
its stimulus by as much as expected, traders said.
    But Taiwanese importers bought U.S. dollar for payments on
dips, limiting the local currency's upside.
    Taiwan financial markets will be closed on Thursday and
Friday.
    
    PHILIPPINE PESO
    The peso gained 0.3 percent to 43.51 per dollar, its
strongest since Aug 12 on expectations of demand linked to
foreign investors' recent stock purchases.
    Foreigners were net buyers in Manila stocks on Monday
and Tuesday.
    Traders hesitated to lift the peso above the session high
ahead of the Fed's announcement, but a foreign bank trader said
the peso has priced in a $10 billion reduction in the U.S.
central bank's bond-buying programme.
    The Philippine currency may strengthen more, but investors
may take profits after the decision as they already added long
positions on expectations of the modest policy shift, he added.
    
  CURRENCIES VS U.S. DOLLAR
  Change on the day at 0430 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen        99.21          99.12       -0.09
  Sing dlr        1.2601         1.2594       -0.06
  Taiwan dlr      29.659         29.760       +0.34
 *Korean won     1081.40        1084.10       +0.25
  Baht             31.67          31.77       +0.32
  Peso             43.55          43.65       +0.23
  Rupiah        11511.00       11430.00       -0.70
  Rupee            63.28          63.37       +0.15
  Ringgit         3.2325         3.2500       +0.54
  Yuan            6.1216         6.1215       -0.00
 
  Change so far in 2013
  Currency    Latest bid  End prev year    Pct Move
  Japan yen        99.21          86.79      -12.52
  Sing dlr        1.2601         1.2219       -3.03
  Taiwan dlr      29.659         29.136       -1.76
  Korean won     1081.40        1070.60       -1.00
  Baht             31.67          30.61       -3.35
  Peso             43.55          41.05       -5.74
  Rupiah        11511.00        9630.00      -16.34
  Rupee            63.28          54.99      -13.09
  Ringgit         3.2325         3.0580       -5.40
  Yuan            6.1216         6.2303       +1.78
 * Financial markets in South Korea are closed for holidays. - Reuters