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EMERGING MARKETS-Bets for Thai rate hold aid baht as weak dollar dominates

Credit: REUTERS/NAVESH CHITRAKAR

Thailand's baht rose to a one-month high on Wednesday ahead of a central bank statement on interest rates that is expected to hold fire on further cuts and save its increasingly limited policy ammunition for later in the year.

By Rashmi Ashok

Aug 5 (Reuters) - Thailand's baht rose to a one-month high on Wednesday ahead of a central bank statement on interest rates that is expected to hold fire on further cuts and save its increasingly limited policy ammunition for later in the year.

Currencies and stocks across Asia's emerging markets were higher across the board in morning trade, with the ringgit MYR=, the won KRW=KFTC and the Taiwanese dollar TWD=TP all turning in solid gains against a broadly weaker U.S. dollar.

With inflation sluggish and its economy reeling from a collapse in tourism and demand for its exports, the recent strength of the baht also supports the case for another cut in Thai rates, analysts say.

Its policymakers, however, are hemmed in by three moves this year which already have rates at a record low of 0.50% and most expect no move on policy on Wednesday.

"While the BOT believes that the economy may have bottomed (out), it is likely to take issue with the baht's recent appreciation," analysts at DBS Research pointed out in a note.

In the past, the BOT has repeatedly warned against undue appreciation in the baht THB=TH. Wednesday's rise put it on track for its third-straight weekly gain.

The BOT's decision is expected at around 0700 GMT.

In the Philippines, data showed annual inflation picked up to 2.7% in July, beating expectations and trending towards the upper end of the central banks target range.

Analysts at Goldman Sachs said in a note they expected interest rates to be kept unchanged for the rest of 2020, while adding the situation was more fluid in light of recent events.

"There are risks of further monetary easing given uncertainties around the virus path, containment policy and the growth recovery, especially after fresh lockdown restrictions were imposed in Metro Manila and nearby provinces last week," the U.S. investment bank said.

The Philippine peso PHP= was subdued, while stocks .PSI rose 1.5%, recovering some of its losses over the past month.

Data showed Indonesia's economy shrank by a sharper-than-expected 5.32% in the second quarter on-year, its weakest performance since 1999, as efforts to contain the coronavirus pandemic hit consumption.

Indonesian stocks .JKSE ticked lower immediately after the data was released, but recovered to trade 0.2% firmer, while the rupiah IDR= barely budged.

HIGHLIGHTS

** Indonesian 10-year benchmark yields fell 1 basis point to 6.829% while 3-year benchmark yields ticked up 0.5 basis points to 5.344%​​

** In the Philippines, top index gainers were Metropolitan Bank and Trust Co MBT.PS up 5.07% and lender BDO Unibank Inc BDO.PS 4.53% higher

** Top gainers on the Singapore STI .STI included Sembcorp Industries Ltd SCIL.SI up 4.71% and Mapletree Commercial Trust MACT.SI with a gain of 3.26%

Asia stock indexes and currencies at 0446 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

+0.10

+2.86

.N225

-0.23

-4.80

China

CNY=CFXS

+0.28

+0.11

.SSEC

0.29

10.86

India

INR=IN

+0.22

-4.68

.NSEI

1.06

-7.85

Indonesia

IDR=

+0.21

-4.41

.JKSE

0.17

-19.30

Malaysia

MYR=

+0.50

-2.60

.KLSE

-0.05

-0.86

Philippines

PHP=

+0.09

+3.27

.PSI

1.75

-24.81

S.Korea

KRW=KFTC

+0.40

-2.77

.KS11

1.04

4.83

Singapore

SGD=

+0.16

-1.93

.STI

0.68

-21.41

Taiwan

TWD=TP

+0.61

+2.54

.TWII

0.70

6.68

Thailand

THB=TH

+0.26

-3.48

.SETI

-0.10

-15.85

(Reporting by Rashmi Ashok in Bengaluru; editing by Patrick Graham and Kim Coghill)

((Rashmi.Ashok@thomsonreuters.com; +918061822604;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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