July 7, 2020 / 8:00 AM / a month ago

EMERGING MARKETS-Malaysia's ringgit falls off 2-week high after rate cut, Asia stocks fall

    * Graphic: World FX rates tmsnrt.rs/2egbfVh
    * Malaysia interest rates cut to record low of 1.75%
    * Indonesia's rupiah gains after bond buying details
revealed 
    * Philippine inflation picks up in June 

    By Nikhil Nainan
    July 7 (Reuters) - Malaysia's ringgit pulled back from a
two-week high on Tuesday after its central bank reduced the
official interest rate return on the currency by another quarter
point, defying the expectations of some market players.
    The move was the bank's fourth this year and took rates in
the Southeast Asia's third-largest economy to a historic low of
just 1.75% as the bank predicted inflation would move into
negative territory this year.
    Analysts had been split almost down the middle on the
outcome of the meeting, with a slim majority expecting a
reduction in borrowing costs and two analysts supporting a
bigger half point move. 
    The ringgit, which had trended higher in morning
trade, dipped to trade flat after the move, while stocks
remained in line with regional losses.
    Elsewhere, Asia's emerging and developed stock markets
cooled off after a recent rally fuelled by recovery hopes and
Chinese stock market gains, with South Korean shares the
biggest faller with a 1.1% decline. 
    Chinese shares extended their run and rose 1.3%,
while Thailand, playing catch-up after a holiday on
Monday, was the only southeast Asian country to match those
gains. 
    The cut in Malaysia follows similar moves in Indonesia and
the Philippines in the last month as policymakers look to soften
the economic hit from the pandemic and support recovery.

    Indonesian officials on Monday laid out details of a $40
billion bond-buying programme. The country's rupiah
advanced more than half a percent on Tuesday. 
    In the Philippines, where COVID-19 infections are still
rising, inflation picked up faster than expected in June as
economic activity gradually resumed, but economists expect
consumption to remain sluggish in the second half.
    Both Philippine shares and the peso dipped. 

    HIGHLIGHTS:
    ** Malaysia's 10-year benchmark yield down 0.5 basis points
at 2.927%
    ** Top Malaysia stock gainers Hong Leong Financial Group Bhd
 and Top Glove Corp Bhd 
    ** Top gainers on the Thailand's SETI include Max
Metal Corp PCL and AQ Estate PCL 
    
             Asia stock indexes and currencies at 0720 GMT
 COUNTRY      FX          FX        FX      INDEX    STOCKS    STOCKS
              RIC         DAILY %   YTD %            DAILY %   YTD %
 Japan                    -0.18     +0.99            -0.44     -4.40
 China                    -0.03     -0.83            0.37      9.68
 India                    -0.34     -4.73            -0.09     -11.61
 Indonesia                +0.54     -3.36            0.08      -20.78
 Malaysia                 +0.05     -4.31            -0.42     -1.16
 Philippines              -0.41     +2.26            -0.96     -19.81
 S.Korea                  +0.01     -3.29            -1.09     -1.52
 Singapore                -0.14     -3.56            -0.65     -17.11
 Taiwan                   +0.45     +2.33            -0.20     0.80
 Thailand                 +0.00     -3.89            1.34      -11.98
 
    
 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by
Patrick Graham and Anil D'Silva)
  
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