Dollar o/n rates in Asia steady; 3-month rates rise

SINGAPORE, Oct 7 (Reuters) - The cost of overnight dollar funding hovered between 2 and 3 percent in Asia on Tuesday as central banks tried to boost liquidity, while three-month rates rose as high as 7 percent due to firmer demand, traders said.

In Singapore, overnight dollar funds USDOND= were quoted between 2 and 3 percent while three-month dollar rates USD3MD= were in the 4.3-5.3 percent range.

Overnight dollar rates were 2.4-2.5 percent in Kuala Lumpur, where three-month funds were indicated between 6.5 and 7 percent.

The cost of overnight funding has held steady in recent sessions, but longer-term dollar rates remained elevated.

"It looks like the short-end rates are coming off but term money is edging higher given the year-end funding needs," said Suresh Kumar Ramanathan, a strategist at CIMB Investment Bank.

"There is a rush given there is only three months left for the year-end. That said, everyone want to keep their books in good order," he said.

The cost of overnight dollar funding shot up to 10 percent in Asia last month -- five times the Federal Reserve's benchmark interest rate --- when Lehman Brothers' collapse sparked a resurgence in the year-old global credit crisis.

Central banks in Japan and Australia injected additional cash into the market on Tuesday, extending the streak of fund injections by major central banks in the past few weeks as the financial turmoil led commercial banks to hoard cash, instead of lending to each other. (Reporting by Kevin Yao and Vidya Ranganathan; Editing by Kim Coghill)