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

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

Reuters  | Jul 03, 2020 16:00

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

* Graphic: World FX rates http://tmsnrt.rs/2egbfVh
* Graphic: Foreign flows into Asian stocks https://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 IDR= 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
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 INR=IN 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 .SSEC .
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.
** Top gainers on the Singapore STI .STI include
CapitaLand Commercial Trust CACT.SI up 2.29% and Jardine Cycle
& Carriage Ltd JCYC.SI up 2.24%
** Among top gainers on the Jakarta stock index .JKSE were
Bank Harda Internasional BBHI.JK up 34.95% and Kedawung Setia
Industrial KDSI.JK 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
Japan JPY= -0.01 +1.04 .N225 0.72 -5.71
China .SSEC 1.89 3.24
India INR=IN +0.16 -4.69 .NSEI 0.61 -12.76
Indones IDR= -1.68 -4.60 .JKSE 0.54 -20.73
Malaysi MYR= -0.02 -4.55 .KLSE 0.52 -2.80
Philipp PHP= +0.48 +2.40 .PSI 0.13 -18.46
S.Korea .KS11 0.80 -2.06
Singapo SGD= +0.04 -3.55 .STI 0.80 -17.53
Taiwan TWD=TP +0.47 +2.23 .TWII 0.88 -0.73
Thailan THB=TH +0.10 -3.70 .SETI 0.04 -12.99

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