July 3, 2020 / 8:00 AM / a month ago

EMERGING MARKETS-Rupiah stumbles, Indian rupee soars; stocks track weekly gains

    * Graphic: World FX rates tmsnrt.rs/2egbfVh
    * Graphic: Foreign flows into Asian stocks tmsnrt.rs/3f2vwbA
    * Indonesian rupiah slips to lowest since May 29
    * India's rupee hits 3-month peak at 74.60 per dollar
    * Asian stocks, ex-Japan, set for weekly gains

    By Rashmi Ashok
    July 3 (Reuters) - The Indonesian rupiah slipped nearly 2%
on Friday on worries about inflationary risks from its central
bank buying low-yielding bonds, while the Indian rupee hit a
three-month high on expected inflows and non-intervention by the
central bank.
    The rupiah headed for a loss of more than 2.6%
against the dollar this week, its biggest weekly fall since the
near 8% plunge it recorded in mid-March during a severe dollar
funding shortage in Asian markets.
    Investors turned cautious after Bank Indonesia (BI)on Monday
agreed to 'share the burden' with the government and buy bonds
with even zero yields to help finance a fiscal deficit bloated
by spending to tackle the coronavirus outbreak. 
    When an emerging economy is purchasing a bond with its own
currency instead of the U.S. dollar, it creates inflation... the
central bank is creating this money from nowhere, said Margaret
Yang, strategist at DailyFX.
    "The U.S. Federal Reserve is doing exactly the same thing,
but the situation there is different because the dollar is a
world currency, so that money supply is not just sitting within
the United States but also circulating to the rest of the
world."
    BI Deputy Governor Dody Budi Waluyo said on Friday the
pressure on the rupiah during the week was due to domestic
factors such as fear of a second wave of COVID-19 infections.

    The Indian rupee extended Thursday's gains to climb
to 74.6, its highest since March 27, as investors bet on further
declines in the dollar amid expectations of further inflows,
with support from the central bank's non-intervention in the
spot market.
    The central bank, which has been aggressively buying dollars
in recent weeks, stayed away on Thursday, triggering a massive
rally in the rupee.
    Except Japan, all Asian stocks were headed for weekly gains,
led by a 5% rise for Chinese shares. 
    The gains came after data that the U.S. economy created jobs
at a record pace in June, while a private survey showed that
China's services sector expanded at the fastest clip in over a
decade in June as consumer demand recovered.
    In the coming week, focus will be on Bank Negara Malaysia's
policy meeting where the central bank is expected to cut
interest rates to a historic low to stem the economic fallout
from the pandemic, according to a Reuters poll found.
 
    
    HIGHLIGHTS:
    ** Top gainers on the Singapore STI include
CapitaLand Commercial Trust up 2.29% and Jardine Cycle
& Carriage Ltd up 2.24% 
    ** Among top gainers on the Jakarta stock index were
Bank Harda Internasional up 34.95% and Kedawung Setia
Industrial up 20.81% 
    ** Thailand's 3-year benchmark yield was up 1 basis points
at 0.6%​​ while Malaysia's 3-year benchmark yield was down 0.9
basis points at 2.191%​​ 

  Asia stock indexes and                                     
 currencies at   0702 GMT                            
 COUNTRY  FX RIC        FX   FX YTD    INDEX  STOCK    STOCKS
                     DAILY        %               S     YTD %
                         %                    DAILY  
                                                  %  
 Japan               -0.01    +1.04            0.72     -5.71
 China    <CNY=CFX   +0.03    -1.43            1.89      3.24
          S>                                         
 India               +0.16    -4.69            0.61    -12.76
 Indones             -1.68    -4.60            0.54    -20.73
 ia                                                  
 Malaysi             -0.02    -4.55            0.52     -2.80
 a                                                   
 Philipp             +0.48    +2.40            0.13    -18.46
 ines                                                
 S.Korea  <KRW=KFT   +0.12    -3.52            0.80     -2.06
          C>                                         
 Singapo             +0.04    -3.55            0.80    -17.53
 re                                                  
 Taiwan              +0.47    +2.23            0.88     -0.73
 Thailan             +0.10    -3.70            0.04    -12.99
 d                                                   
 


    







 (Reporting by Rashmi Ashok in Bengaluru; Editing by Sriraj
Kalluvila)
  
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