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Asia, Forex

Rupiah, stocks rise as Bank Indonesia holds rates

* Bank Indonesia says Q4 GDP will expand, FY21 outlook bright * Asian stock markets rise across the board after recent slump * Japan’s equity markets closed for a holiday By Anushka Trivedi July 22 (Reuters) – The rupiah saw its best day in almost two weeks on Thursday, as Bank Indonesia (BI) held interest rates steady to support the pandemic-ravaged economy and sounded optimism on 2021 growth, even as most of the country remained under tough curbs. Regional peers Singapore’s dollar, the South Korean won and Taiwan’s dollar also gained, basking in the greenback’s weakness as risk appetite rebounded with strong earnings lifting Wall Street stocks overnight. The rupiah firmed 0.4% after the Indonesian central bank kept its key interest rate at a record low of 3.50% as widely expected, and said it would strenghthen measures to stabilise the currency after a bout of volatility. The rupiah has weakened 2.5% over the past six weeks since the COVID-19 situation in the heavily-populated Indonesia worsened, with total cases nearing 3 million amid a slow vaccination rate and a creaky healthcare system. However, BI predicted fiscal 2021 growth could be higher than the midpoint of its 3.5%-4.3% range, citing a less-than-expected decline in activity during current mobility curbs while banking on vaccinations gathering pace. Local stocks jumped 1.8%, with lenders leading the gains as the central bank forecast better loan growth and promised it would keep providing ample liquidity. “BI has less room to deliver a rate cut going forward, as U.S. monetary policy looks to tighten with a taper of asset purchases in the coming months,” said Wei Liang Chang, macro-strategist at DBS Bank. “That said, Indonesia’s policy rate is already at an accommodative level, and it will support an eventual recovery when the pandemic’s impact eases,” he added. Asian equities tracked their global counterparts higher, with analysts pegging the gains on “buy the dip” behaviour and positive sentiment from the U.S. markets. Most stock indexes in the region like in India, Malaysia and Thailand have declined on a month-to-date basis as concerns over a Delta variant-led spike in COVID-19 infections and lockdowns worried investors. The Philippine stock index was up 1.6% on Thursday after four sessions of heavy losses, while Singapore and South Korea equities rose more than 1% each. HIGHLIGHTS ** Thai central bank says virus outbreak to cut GDP by 0.8-2.0% in 2021 ** Indonesian 10-year benchmark yields are down 2 basis points at 6.307% ** Bank Central Asia and Bank Rakyat Indonesia (Persero) Tbk among top gainers on Jakarta index, up 2.3% and 2.1%, respectively Asia stock indexes and currencies at 0807 GMT COUNTRY FX RIC FX DAILY % FX YTD % INDEX STOCKS DAILY % STOCKS YTD % Japan -0.04 -6.41 0.00 0.38 China +0.04 +0.96 0.34 2.93 India +0.24 -1.84 1.21 13.16 Indonesia +0.41 -3.04 1.78 2.65 Malaysia +0.17 -4.81 0.50 -6.34 Philippines -0.02 -4.23 1.55 -7.89 S.Korea +0.36 -5.54 1.07 13.11 Singapore +0.16 -2.96 1.33 11.14 Taiwan +0.20 +1.66 0.65 19.28 Thailand -0.06 -8.80 0.61 6.97 (Reporting by Anushka Trivedi in Bengaluru; editing by Uttaresh.V)

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