Emerging FX-Rupiah near 5-mth low as risky trades unwind

SINGAPORE, July 30 (Reuters) The Indonesian rupiah fell a quarter of a percent on Monday as selling of Asia's high-yielding currencies resumed and tensions in global equity and credit markets remained heightened.

The rupiah stayed near Friday's low of 9,250 per dollar, which was its lowest in nearly 5 months.

The South Korean won hit its lowest in a month at 924 per dollar as markets continued to exit carry trades and therefore buy back cheaper currencies while selling high-yielding assets.

Risk reduction remained the predominant theme in markets, driven by fear that a crisis in the U.S. subprime mortgage market is turning into a broader credit crunch.

That meant investors were buying back the yen even after Japanese Prime Minister Shinzo Abe's crushing defeat in upper house elections on Sunday.

Ashley Davies, a strategist at UBS, said he suspected foreign investors from Japan were still coming to grips with the subprime mortgage situation and would still have U.S.investments to be unwound.

''What you might get is further position adjustment on the foreign side with respect to U.S. asset markets, in which case the yen shall remain firm,'' he said.

The scramble out of risky assets however meant other Asian low-yielders, such as the Singapore dollar and Taiwan dollar , remained steady or even managed small gains.

Strategists at Goldman Sachs said in a report that for the time being they would opt to stay short the U.S. dollar.

''At this stage, we prefer exposure versus low-yielding Asian currencies, which are likely to do well in a more volatile environment of higher risk aversion,'' they said.

''Specifically, we are short dollar versus Korean won, Japanese yen, Singapore dollar and Taiwan dollar,'' they said.

Reuters SW GC0852