EMERGING MARKETS-Rupiah rallies on bumper bond demand, other Asian FX slip

  • 5/6/2021
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* Graphic: World FX rates tmsnrt.rs/2RBWI5E * Indonesia benchmark bond yield drops * Malaysia cenbank keeps rates steady * Increase in Asia"s virus cases to dent FX appeal - analyst By Anushka Trivedi May 6 (Reuters) - The Indonesian rupiah hit a seven-week high on Thursday as the country"s bonds stayed in demand, while all other Asian currencies languished against a dollar buoyed by brightening growth prospects in the world"s biggest economy. The greenback built on momentum stemming from encouraging economic data and higher inflation raising chances of a rate hike, sending Singapore"s dollar, the Thai baht and South Korea"s won lower by 0.1% to 0.4%. "The U.S. dollar looks like has found a floor and that suggests Asian currencies will largely be on the back foot," said Mitul Kotecha, chief EM Asia & Europe strategist at TD Securities. "The increase in virus cases across much of the region is also likely to dent support for Asian currencies." However, Kotecha and several analysts pointed to investor appetite for high-yielding debt markets like Indonesia to keep its currency supported. The rupiah jumped 0.8%, while the country"s benchmark bond yields were down 1.9 basis points at 6.458%. The 10-year yields have declined 43.6 basis points since their March highs. Even with the pandemic"s impact on Southeast Asia"s largest economy, "the rupiah is set to receive support from foreign fund inflows, especially if the global hunt for yields persists", said FXTM market analyst Han Tan. Meanwhile, Kuala Lumpur stocks hit a six-month low and the currency eased 0.2% as fresh two-week curbs in the capital added to lockdowns already in place in economically prosperous regions of the country. Bank Negara Malaysia (BNM) left the benchmark interest rate unchanged at a record low of 1.75%, as expected, and said it was seeing improvements in activity, with vaccination expected to drive a rebound. Goldman Sachs analysts expect BNM to keep rates on hold for the rest of the year as the economic hit from the latest lockdown measures is expected to be less pronounced than previously. HIGHLIGHTS ** Singapore shares firm 0.7% after four days of losses ** China stocks slip 0.2% on resuming trade after holidays this week ** India reported more than 400,000 coronavirus infections over the last 24 hours, taking the total tally past 21 million Asia stock indexes and currencies at 0801 GMT COUNTRY FX RIC FX DAILY % FX YTD % INDEX STOCKS DAILY % STOCKS YTD % Japan -0.15 -5.58 1.80 6.88 China -0.02 +0.81 -0.16 -0.92 India +0.06 -1.09 0.68 5.26 Indonesia +0.80 -1.92 -0.09 -0.15 Malaysia -0.12 -2.43 -0.44 -3.59 Philippines +0.03 +0.13 -0.27 -12.00 S.Korea -0.28 -3.52 1.00 10.62 Singapore -0.09 -1.15 0.72 11.70 Taiwan -0.11 +1.76 0.90 15.35 Thailand -0.35 -4.01 1.44 8.43 (Reporting by Anushka Trivedi in Bengaluru, additional reporting by Rashmi Ashok)

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