Emerging FX-Rally in Asian high-yielders extends warily

SINGAPORE, Aug 3 (Reuters) The Indonesian rupiah, Philippine peso and other Asian high-yielders extended their recovery on Friday after a rally in stock markets helped investors overcome some of their concerns about global credit markets.

Stock markets in South Korea, Taiwan and some other parts of Asia rallied in line with moves overnight in U.S. stocks, but talk of further delinquencies in the U.S. subprime sector and a rise in U.S. Treasuries showed investors were still wary of taking on risk.

The dollar held above a four-month low against the yen , showing a pause in the unwinding of carry trades funded by the cheap yen, as investors waited for a U.S. payrolls report later in the day.

The rupiah was traded at 9,275 per dollar, about 0.7 per cent away from the week's low at 9,340. The peso still kept a broadly steady range of 45.60 to 45.80 per dollar, slightly up from Thursday's low of 45.93.

The Malaysian ringgit's moves were slow as it gained 0.1 per cent to hit 3.4645 per dollar.

''The markets are looking more stable but I doubt risk appetite has recovered,'' said Bank of America strategist Christy Tan.

''A negative surprise on non-farm payrolls, and if that translates into another round of sell-off in equity markets, could be one of the key risks for the weekend,'' she said.

Another Singapore-based trader said a hedge fund had bought billions of dollars worth of major currencies on Thursday against the yen, including purchases of U.S. dollars, the Aussie , kiwi and other crosses.

That helped stall the heavy unwinding of carry trades which had boosted the yen, he said.

''But dollar/Asia has been sold a lot this year and now we've seen heavy short-covering. That momentum has made the peso, won and other Asian currencies move a lot in the last few days,'' he said.

REUTERS RJ BD0847