* Graphic: World FX rates tmsnrt.rs/2egbfVh * Graphic: Foreign flows into Asian stocks tmsnrt.rs/3f2vwbA * Singapore shares set to snap two-day losing streak * Outlook for lower long term U.S. rates buoy Asia FX * Spike in COVID-19 infections hits Indonesian markets By Shriya Ramakrishnan Aug 28 (Reuters) - Asian currencies edged up on Friday as investors bet that the U.S. Federal Reserve's new strategy to lift inflation and spur growth will keep its interest rates lower for longer, supporting rate differentials with the region's higher-yielding emerging markets. Taiwan's dollar again led gains, up more than half a percent, while the Philippine peso rose around 0.3%, while South Korea's won and the Singapore dollar were more subdued, edging up around 0.1%. "Powell's speech is bearish for the USD over the medium to long term because U.S. real interest rates will have room to fall further into negative territory," said Joseph Capurso, head of international economics at CBA. The broader message from the Fed of more efforts to boost growth pushed U.S. 10-year bond yields higher, however, providing some support to the dollar and keeping a lid on flows into riskier Asian assets. Yields on long-dated government bonds for Thailand and Indonesia were up 7.5 and 6.4 basis points (bps) each, and both the Indonesian rupiah and Malaysian ringgit traded lower on the day. "If the U.S. curve steepens by more than 50-75 bps from here, the impact on Asian markets could be material," said Duncan Tan, interest rates strategist at DBS. "In that scenario, we would likely see reallocation of global capital away from Asia and to the U.S., leading to higher rates and weaker currencies in Asia." In Indonesia, the rupiah weakened 0.2% and stocks slipped as the country reported its biggest daily spike in coronavirus infections. Singapore shares rose 1.8% following overnight gains on Wall Street, while Thai shares were up about half a percent. South Korea's export-focused KOSPI also recovered from a more than 1% fall in the previous session. Facing a surge in new coronavirus cases, the government decided to extend current social distancing measures instead of moving to tougher restrictions, easing concerns about further economic fallout. HIGHLIGHTS: ** Malaysia's 10-year benchmark yield is up 2.9 basis points at 2.65% ** Top gainers on the Singapore STI include Singapore Airlines Ltd up 3.58% at S$3.76, SATS Ltd up 3.07% at S$3.02, Keppel Corporation Ltd up 3.06% at S$4.71 ** In the Philippines, top index losers are Megaworld Corp down 3.32% at 2.91 peso; Ayala Land Inc down 3.03% at 28.8 peso; SM Investments Corp down 2.63% at 850 peso Asia stock indexes and currencies at 0427 GMT COUNTRY FX RIC FX FX INDEX STOCK STOCKS DAILY YTD % S YTD % % DAILY % Japan -0.22 +1.70 0.56 -1.34 China <CNY=CFXS +0.25 +1.25 0.51 10.39 > India 0.00 -3.29 0.61 -4.43 Indonesi -0.17 -5.42 -0.78 -15.40 a Malaysia -0.07 -2.01 -0.33 -2.46 Philippi +0.28 +4.57 -0.72 -24.77 nes S.Korea <KRW=KFTC +0.11 -2.31 0.69 7.41 > Singapor +0.13 -1.42 1.82 -20.39 e Taiwan +0.52 +2.55 -0.47 6.17 Thailand +0.06 -4.13 0.56 -15.55 (Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Patrick Graham and Kim Coghill)
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