SINGAPORE, Aug 28 (Reuters) The Indonesian rupiah retreated against the dollar on Tuesday and most

SINGAPORE, Aug 28 (Reuters) The Indonesian rupiah retreated against the dollar on Tuesday and most other Asian currencies fell after weak U.S. housing data aroused fresh risk aversion, a day after investors had found some appetite for risky assets.

The rupiah was back on the weaker side of 9,400 per dollar on Tuesday and Bank Indonesia was suspected of providing dollars at around that level, traders said. It shed nearly 0.4 percent from Monday's close.

Other Asian currencies fell to a smaller extent alongside a rise in the yen , which investors typically use as a funding currency for buying higher-yielding assets.

Stock markets in Singapore and Hong Kong were weaker after data showing unsold U.S. homes reached a near 16-year high in July, which stoked concern about the mortgage sector and U.S. consumer spending.

The Malaysian ringgit shed 0.4 percent to hit 3.4930 per dollar, the South Korean won fell to 940 per dollar from Monday's closing levels near 938 and the Singapore dollar slipped to the weaker side of 1.52 per U.S. dollar.

''There is still a clear sense from our U.S. credit analysts and economists that we are not quite out of the woods yet,'' JPMorgan Chase said in a note to clients.

JPMorgan said there could be more bad news from the U.S. housing sector and from other credit markets, but Asian high-risk currencies such as the rupiah could continue to inch higher in the meantime.

''People are watching the yen. If the yen goes up, we sell rupiah. If it goes down, we buy rupiah,'' said one trader in Jakarta.

But he also said the subprime mortgage woes had thinned volume in the rupiah, both onshore and offshore.

''Exporters sell dollars above 9,400, and there are foreigners and other real buyers of dollars below 9,400,'' he said.

Traders were focusing their attention on an auction of Indonesian zero coupon bonds and 21-year bonds by the government on Tuesday, and on inflation data next week which many worry could turn out to be high.

Many foreigners who had liquidated their positions in Indonesian bonds over the past month still had their funds in rupiah and could be looking for fresh assets, one trader said.

Citibank economist Anton Gunawan said in a report issued on Friday that the outstanding amount of Indonesian bonds held by non-residents was only around $2 billion after foreigners had sold about $3 billion of those bonds in the past few weeks.

''Tuesday's government bond auction ... will provide a litmus test on local market confidence,'' JPMorgan said.

''We would look to add long rupiah positions, assuming a successful bond auction and a break of dollar/rupiah below 9,300.'' CURRENCIES VS U.S. DOLLAR Change on the day at 0249 GMT Currency Latest bid Previous day Pct Move Japan yen 115.65 116.12 +0.41 Sing dlr 1.5218 1.5188 -0.20 Taiwan dlr 33.009 32.993 -0.05 Korean won 940.20 938.50 -0.18 Baht 34.38 34.36 -0.06 Peso 46.65 46.70 +0.11 Rupiah 9395.00 9372.00 -0.24 Rupee 41.02 41.02 +0.00 Ringgit 3.4960 3.4795 -0.47 Yuan 7.5550 7.5622 +0.10 Change so far in 2007 Currency Latest bid End prev year Pct Move Japan yen 115.65 119.01 +2.91 Sing dlr 1.5218 1.5337 +0.78 Taiwan dlr 33.009 32.585 -1.28 Korean won 940.20 929.50 -1.14 Baht 34.38 36.08 +4.94 Peso 46.65 49.03 +5.10 Rupiah 9395.00 8988.00 -4.33 Rupee 41.02 44.26 +7.89 Ringgit 3.4960 3.5270 +0.89 Yuan 7.5550 7.8051 +3.31 REUTERS RC ND1010