Emerging FX-Asia rangebound, awaits Japan c.bank decision

SINGAPORE, Jan 16 (Reuters) Most Asian currencies hovered in narrow ranges on Tuesday, with trade subdued as investors await the outcome of the Bank of Japan's policy meeting later this week.

Asian currencies bounced back on Monday after coming under pressure since earlier this month due to an unwinding of the yen carry trades, Thailand's revised foreign investment laws and the decline in emerging market stocks and commodity prices.

Shahab Jalinoos, currency analyst at ABN AMRO Bank, said trading was lacklustre on Tuesday ahead of the Bank of Japan's policy meeting and a rate decision by the Bank of Thailand.

Although some sceptics remain, most market players expect the Japanese central bank to raise interest rates by 25 basis points to 0.50 percent at a two-day policy meeting that ends on Thursday.

The Bank of Thailand meets on Wednesday with the market anticipating a rate cut although analysts polled by Reuters were split on whether political and economic uncertainties would persuade the central bank to stay pat.

The yen edged lower toward a 13-month trough against the dollar on Tuesday, getting little reprieve despite market expectations for a Bank of Japan rate rise.

''Asia may be a bit rangebound today given the mood in the dollar/yen. Nevertheless, implicit yuan pressures remain a backdrop, given the stream of fairly strong investment and money supply numbers,'' said Emmanuel Ng, currency strategist at OCBC Bank.

The yuan hit a post-revaluation high of 7.7876 per dollar after the central bank set the yuan's mid-point against the U.S. currency at 7.7895.

The Chinese Academy of International Trade and Economic Cooperation, a think-tank of China's Ministry of Commerce, said on Tuesday that the yuan was undervalued and further appreciation was needed to balance the economy.

But the think-tank cautioned that China should avoid repeating Japan's serious asset price bubbles after yielding to U.S. pressures to let the yen rise sharply in the 1980s.

The yuan has now appreciated a further 4.1 percent since it was revalued by 2.1 percent to 8.11 per dollar on July 21, 2005.

The Thai baht under pressure since the central bank imposed capital controls to curb its rise in mid-December, slipped to the weak side of 36 per dollar, but the Philippine peso rose to 48.76 per dollar.

The South Korean won was quoted as high as 935.5 per U.S. dollar, boosted by demand for the local currency from foreign investors who have bought domestic shares.

REUTERS BDP BD1028