EMERGING MARKETS-Rupee sees best week in 2 years as investors weigh Fed message

Credit: REUTERS/THOMAS WHITE

India's rupee rose for the fourth session in five on Friday as traders reported no sign of a return of central bank selling, leading gains across Asia against the dollar following a landmark speech by U.S. Federal Reserve chief Jerome Powell.

By Shriya Ramakrishnan

Aug 28 (Reuters) - India's rupee rose for the fourth session in five on Friday as traders reported no sign of a return of central bank selling, leading gains across Asia against the dollar following a landmark speech by U.S. Federal Reserve chief Jerome Powell.

There was some strength for the dollar overnight as 10-year U.S. bond yields pushed higher after Powell's message that the central bank would allow inflation to run higher and do more to get it there in future.

But it struggled throughout the Asian morning and currencies including the Singapore SGD= and Taiwan dollars TWD=TP, as well as China's yuan CNY=CFXS, all traded a third of a percent or more higher.

The rupee INR=IN has been surging since Monday, when the Reserve Bank of India appeared to halt its recent policy of intervening heavily in the market against the currency, and hit its highest in nearly six months on Friday, on course for its best week since late December 2018.

Traders said they expected the bank to return to the market soon, however, in part to ensure it builds more forex reserves, $60 billion to $535.35 billion so far this fiscal year.

"The RBI must have let the currency appreciate to shatter the complacency but this may not be the case going forward and we might see the central bank again coming into action," said Gaurang Somaiya, an FX analyst at Mumbai-based broker and trading firm Motilal Oswal Financial Services.

The Indonesian rupiah IDR= took back early losses to trade 0.2% higher, while the Philippine peso PHP= also rose against the greenback.

The jump in U.S. bond yields, however, capped flows into riskier Asian assets, with yields on long-dated government bonds for Malaysia MY10YT=RR, Thailand TH10YT=RR and Indonesia ID10YT=RR all higher.

Shares in Jakarta .JKSE took a beating, as the country reported its biggest daily spike in coronavirus infections.

Singapore shares .STI snapped two sessions of losses, boosted by gains in the heavyweight financial sector, while Malaysian shares .KLSE moved little on better-than-expected export data.

HIGHLIGHTS:

** Thailand's 10-year government bond yields TH10YT=RR are up 6 basis points at 1.47%, while Indonesian 10-year benchmark yields ID10YT=RR are up 6.4 basis points at 6.873%

** Top gainers on the Singapore STI .STI include Singapore Airlines Ltd SIAL.SI up 2.75% at S$3.73, SATS Ltd SATS.SI up 2.39% at S$3, Keppel Corp Ltd KPLM.SI up​ 2.19% at S$4.67

** Top losers on FTSE Bursa Malaysia Kl Index .KLSE include Hap Seng Consolidated Bhd HAPS.KL down 3.55% at 7.6 ringgit; PETRONAS Chemicals Group Bhd PCGB.KL down 3.27% at 5.62 ringgit; MISC Bhd MISC.KL down 2.84% at 7.54 ringgit

Asia stock indexes and currencies at 0710 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

+0.47

+2.41

.N225

-1.41

-3.27

China

CNY=CFXS

+0.38

+1.38

.SSEC

1.51

11.50

India

INR=IN

+0.55

-2.76

.NSEI

0.79

-4.26

Indonesia

IDR=

+0.10

-5.16

.JKSE

-0.65

-15.28

Malaysia

MYR=

+0.00

-1.94

.KLSE

-0.64

-2.77

Philippines

PHP=

+0.38

+4.68

.PSI

-0.63

-24.71

S.Korea

KRW=KFTC

+0.06

-2.36

.KS11

0.40

7.10

Singapore

SGD=

+0.30

-1.26

.STI

1.22

-20.86

Taiwan

TWD=TP

+0.52

+2.55

.TWII

-0.53

6.10

Thailand

THB=TH

+0.16

-4.04

.SETI

0.18

-15.86

(Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Patrick Graham and Subhranshu Sahu)

((Shriya.Ramakrishnan@thomsonreuters.com; +91 8061822842 ;))

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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