Emerging FX-Indonesia rupiah at 4-month high, carry trade back

Singapore, May 4 (Reuters) The Indonesian rupiah rose to a four-month high today, extending gains against the US dollar, boosted by renewed yen carry trades.

Dealers said this week's yen weakness was encouraging investors to sell the low-yielding Japanese currency in favour of higher-yielding ones -- such as the rupiah and Indian rupee.

The rupiah rose as far as 9,015 per dollar , its highest level since January 9, according to Reuters data.

''The carry trade is back looking at the rupiah and rupee,'' said Alvin Cheng, a trader at Fortis Bank Hong Kong Branch.

Talk of a further cut in Indonesian interest rates has also boosted foreign demand for local bonds and given the rupiah rally momentum, analysts said.

Yields on benchmark 10-year bonds have fallen just over 20 basis points this week. The rupiah has gained about 0.7 percent against the dollar in the past two days.

''For the rupiah, there was more talk just two days ago of more rate cuts,'' said Cheng. ''So there was lots of hot money coming in.'' CURRENCIES VS US DOLLAR Change on the day at 0118 GMT Currency Latest bid Previous day Pct Move Japan yen 120.36 120.14 -0.18 Sing dlr 1.5216 1.5223 +0.05 Taiwan dlr 33.293 33.281 -0.04 Korean won 927.50 926.70 -0.09 Baht 34.75 34.74 -0.03 Peso 47.56 47.59 +0.06 Rupiah 9025.00 9040.00 +0.17 Ringgit 3.4195 3.4195 +0.00 Yuan 7.7039 7.7039 +0.00 Change so far in 2007 Currency Latest bid End prev year Pct Move Japan yen 120.36 119.01 -1.12 Sing dlr 1.5216 1.5337 +0.80 Taiwan dlr 33.293 32.585 -2.13 Korean won 927.50 0929.50 +0.22 Baht 34.75 36.08 +3.83 Peso 47.56 49.03 +3.09 Rupiah 9025.00 8988.00 -0.41 Rupee 41.11 44.26 +7.65 Ringgit 3.4195 3.5270 +3.14 Yuan 7.7039 7.8051 +1.31 REUTERS PM ND1124