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EMERGING MARKETS-Indian rupee steady, stocks climb as central bank seen cutting rates

    * Graphic: World FX rates tmsnrt.rs/2egbfVh
    * Graphic: Foreign flows into Asian stocks tmsnrt.rs/3f2vwbA
    * Economists divided on RBI decision, lean towards rate cut
    * RBI decision, comments on moratorium expected around 0630
GMT
    * Thai baht weak after BOT warns against baht strength
    * Philippine economy dives into recession in Q2

    By Rashmi Ashok
    Aug 6 (Reuters) - The Indian rupee firmed and stocks climbed
on Thursday in the run up to the Reserve Bank of India's policy
decision, expected to be a close call, with economists leaning
slightly towards a rate cut.
    The RBI is seen cutting rates by 25 basis points to help
boost growth despite inflationary pressures, as coronavirus
cases continue unabated and businesses struggle to recover from
large-scale lockdowns.
    A decision on a moratorium on loan repayments, currently set
to expire by end-August, is also expected.
    "With contention over loan moratoriums, and move to help
with debt restructuring, softer interest rates may be desired.
- especially insofar that public debt burdens are also set to
mount significantly," analysts at Mizuho wrote.
    Debt financing is a big concern, given that India's federal
fiscal deficit touched a record $88.5 billion in the second
quarter, 83.2% of the target for the whole current fiscal year,
due to coronavirus-led spending.
    Mizuho leans towards a 25 basis point cut, expecting the RBI
to strike a judicious balance between preventing a solvency
crisis for businesses hit by cash-flow shock or P&L damage and
an adverse impact on local banks' balance sheets. 
    "A weaker USD backdrop may help quell worries of rupee
 wobbles, if rate cuts are deemed to have gone too far,"
they added. 
    The RBI's decision is expected around 0630 GMT. 
    The dollar continued its decline after weak U.S. jobs data
overnight, helping most Asian currencies notch firm gains, led
by the Taiwan dollar.
    The Indonesian rupiah struggled after Wednesday's
data showed its economy shrank for the first time since 1999 in
the second quarter, which prompted bets of more rate cuts.

    Later into the day, Finance Minister Sri Mulyani Indrawati
said the central bank and financial authorities would go "all
out" to support growth, vowing to boost fiscal spending in the
second half to avoid another contraction. 
    This stepped up pressure on the rupiah, which tumbled last
month after Bank Indonesia agreed to help the government fund a
huge fiscal deficit by buying bonds without receiving interest,
a move many analysts say carries inflationary risks.

    Thailand's baht edged lower after its central bank
on Wednesday voiced concern that currency strength could affect
economic recovery, and warned it would take the "necessary
steps" to deal with it.
    Philippine stocks edged lower after data showed the
country's economy plunged by much more than expected in the
second quarter, falling into recession for the first time in 29
years.
    
    HIGHLIGHTS
    ** Indonesian 10-year benchmark yields fell 2.9 basis points
to 6.803%​​ while 3-year benchmark yields eased 0.2 basis points
to 5.316%​​ 
    ** In the Philippines, top index gainers were Puregold Price
Club Inc up 4.27% and Security Bank Corp up
3.45% 
    ** Top gainers on Thailand's SETI included
Thai-German Products up 16.67% and Sriracha
Construction adding 14.88% 

  Asia stock indexes and                                   
 currencies at   0432 GMT                             
 COUNTRY      FX RIC       FX     FX    INDEX  STOCK  STOCK
                        DAILY  YTD %               S  S YTD
                            %                  DAILY      %
                                                   %  
 Japan                  +0.06  +2.94           -0.39  -5.19
 China        <CNY=CFX  -0.13  +0.28           -0.38  10.32
              S>                                      
 India                  +0.17  -4.58            0.58  -8.24
 Indonesia              -0.48  -4.87            0.85  -17.9
                                                          2
 Malaysia               +0.10  -2.32            0.53  -0.78
 Philippines            +0.06  +3.28           -0.09  -25.4
                                                          2
 S.Korea      <KRW=KFT  +0.33  -2.41            0.96   6.21
              C>                                      
 Singapore              +0.01  -1.82            0.90  -20.7
                                                          1
 Taiwan                 +0.52  +2.57            0.76   7.52
 Thailand               -0.23  -3.73            0.14  -15.2
                                                          3
 


 (Reporting by Rashmi Ashok in Bengaluru; editing by Richard
Pullin)
  
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