Emerging Asia FX-Taiwan dollar, rupiah weaker

SINGAPORE, Sep 29 (Reuters) The Indonesian rupiah fell on Friday, weakened by the steady drop in the Japanese yen, while the Taiwan dollar slipped as foreign investors sold Taiwanese assets.

Other Asian currencies showed no signs of moving out of the narrow ranges they have held all week.

The Chinese yuan weakened 0.13 percent to 7.9070 per dollar after having risen to its highest levels since last July's revaluation for four consecutive sessions.

The Taiwan dollar weakened to a 9-month low of 33.059 per dollar, taking its losses in 10 days to 1 percent.

''Foreigners are taking their money back,'' said a Taipei-based trader, adding the central bank did not seem to mind the weakness in its currency.

Foreign investors have made net purchase of about SINGAPORE, Sep 29 (Reuters) The Indonesian rupiah fell on Friday, weakened by the steady drop in the Japanese yen, while the Taiwan dollar slipped as foreign investors sold Taiwanese assets.

Other Asian currencies showed no signs of moving out of the narrow ranges they have held all week.

The Chinese yuan weakened 0.13 percent to 7.9070 per dollar after having risen to its highest levels since last July's revaluation for four consecutive sessions.

The Taiwan dollar weakened to a 9-month low of 33.059 per dollar, taking its losses in 10 days to 1 percent.

''Foreigners are taking their money back,'' said a Taipei-based trader, adding the central bank did not seem to mind the weakness in its currency.

Foreign investors have made net purchase of about $2.4 billion into the Taiwan stock market so far this month and it has been one of the biggest beneficiaries of foreign portfolio flows this year.

Yet economists are worried about growth prospects. Exports have driven most of the growth so far this year while consumer and business sentiment and spending have languished.

The central bank raised its discount rate for the ninth straight time on Thursday by 12.5 basis points to 2.625 percent, a decision questioned by some analysts.

''Taiwan has focused almost all their economic policies on the export sector at the expense of the domestic sector in recent months and this one is no different,'' UBS said in a note to clients.

''If global demand were to slow Taiwan would not have the cushion of domestic demand to fall back on.'' UBS said it expects the Taiwan dollar to decline towards technical resistance at 33.30 and reach that level within a month.

CHINA MYSTERY The rupiah fell a quarter of a percent to 9,240 per dollar.

A Jakarta-based trader said the reason for the fall was the yen, which weakened to 117.80 per dollar after inflation and industrial output data reinforced expectations that Japanese rate rises will be very gradual.

But the yuan's decline had traders wondering whether the currency was merely correcting after the steep rise or whether Chinese authorities were reining it in after U.S. Senators Charles Schumer and Lindsey Graham said they were dropping plans to push their bill threatening China with stiff import duties.

The yuan had risen 0.7 percent in two weeks, fuelling some speculation of an imminent widening of its narrow daily trading bands against the dollar as part of a deal with U.S. Treasury Secretary Henry Paulson who visited Beijing last week.

China has week-long National Day holidays starting from Oct. 2. and traders had been bracing for the currency to retreat before that.

REUTERS LL HS1059 .4 billion into the Taiwan stock market so far this month and it has been one of the biggest beneficiaries of foreign portfolio flows this year.

Yet economists are worried about growth prospects. Exports have driven most of the growth so far this year while consumer and business sentiment and spending have languished.

The central bank raised its discount rate for the ninth straight time on Thursday by 12.5 basis points to 2.625 percent, a decision questioned by some analysts.

''Taiwan has focused almost all their economic policies on the export sector at the expense of the domestic sector in recent months and this one is no different,'' UBS said in a note to clients.

''If global demand were to slow Taiwan would not have the cushion of domestic demand to fall back on.'' UBS said it expects the Taiwan dollar to decline towards technical resistance at 33.30 and reach that level within a month.

CHINA MYSTERY The rupiah fell a quarter of a percent to 9,240 per dollar.

A Jakarta-based trader said the reason for the fall was the yen, which weakened to 117.80 per dollar after inflation and industrial output data reinforced expectations that Japanese rate rises will be very gradual.

But the yuan's decline had traders wondering whether the currency was merely correcting after the steep rise or whether Chinese authorities were reining it in after U.S. Senators Charles Schumer and Lindsey Graham said they were dropping plans to push their bill threatening China with stiff import duties.

The yuan had risen 0.7 percent in two weeks, fuelling some speculation of an imminent widening of its narrow daily trading bands against the dollar as part of a deal with U.S. Treasury Secretary Henry Paulson who visited Beijing last week.

China has week-long National Day holidays starting from Oct. 2. and traders had been bracing for the currency to retreat before that.

REUTERS LL HS1059