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EMERGING MARKETS-Indian bond yields rise, rupee strengthens as c.bank keeps rates steady

· 02/05/2021 02:31
EMERGING MARKETS-Indian bond yields rise, rupee strengthens as c.bank keeps rates steady

India's Nifty 50 index heads for best week since April

Indonesia's Q4 GDP shrinks more than expected

Thailand, Philippines and S. Korea gain ~1% each

By Shruti Sonal

- Indian bond yields rose and the rupee strengthened on Friday, after the central bank kept interest rates unchanged at record low levels and said it would maintain support for the economy's recovery from the COVID-19 pandemic.

Reserve Bank of India (RBI) governor Shaktikanta Das said the Indian economy is poised to move upwards and that inflation was expected to remain within its targeted range over the next few quarters. nL1N2KB0BP

"We're looking at a very sharp bounce back in growth", said Sameer Narang, chief economist at Bank of Baroda.

"The central bank's monetary and fiscal policy are going hand in hand, and that's an important takeaway".

The Indian rupee INR=IN strengthened to 72.94 against the dollar, while the 10-year bond yield IN057730G=CC rose to 6.18%, its highest since August.

The upward trend in the bond yields is likely to continue due to the RBI's strategy of keeping an elevated borrowing program to support economic growth next year, Narang added.

Indian shares .NSEI, which have gained nearly 10% during the week in a budget-fuelled rally, retreated from their record highs but were set to post their best week since April.

In Indonesia, shares .JKSE erased some early gains after data showed the economy shrank slightly more than expected in the fourth quarter, leading to its first full-year contraction in over two decades.

The Jakarta benchmark .JKSE, which had added as much as 0.7% in early trade, pared some gains to trade up 0.3% by 0638 GMT.

"Worryingly, the outlook for 2021 remains uncertain as the country continues to battle an intensifying COVID-19 outbreak", Mizuho Bank analysts said in a note.

"Beyond Q1, improvement in growth will be uneven, possibly interrupted, depending on the vaccine-pandemic evolution determining outbreak severity."

Thailand .SETI, Philippine .PSI and South Korean .KS11 benchmarks gained 1%, in line with gains in the broader markets, as progress in vaccine distribution led to hopes for further normalisation in the global economic recovery.

In the Philippines, annual inflation accelerated faster than expected to hit the highest level in two years in January, limiting the central bank's room for further interest rate cuts at its meeting next week. nL1N2KB03W

Most currencies in the region weakened as the dollar headed for its best weekly gain in three months, supported by growing confidence that the U.S. economic recovery will outpace global peers.

The Indonesian rupiah IDR=, Malaysian ringgit MYR=, Singapore dollar SGD= and the Thai baht THB=TH fell between 0.1% and 0.4%.


Highlights:


** Thai Bev to sell 20% of beer business in blockbuster Singapore IPO nL1N2KB032

** Indonesian 10-year benchmark yields are down 3.50 basis points at 6.165%

** Top gainers on the Thailand's SETI .SETI include TWZ Corporation PCL TWZ.BK, Pan Asia Footwear PCL PAF.BK, R&B Food Supply PCL RBF.BK



Asia stock indexes and currencies at 0712 GMT




COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

+0.04

-2.14

.N225

1.54

4.86

China

CNY=CFXS

-0.02

+0.85

.SSEC

-0.15

0.67

India

INR=IN

+0.05

+0.21

.NSEI

0.40

6.96

Indonesia

IDR=

-0.07

+0.14

.JKSE

0.48

2.63

Malaysia

MYR=

-0.34

-1.25

.KLSE

-0.39

-2.98

Philippines

PHP=

-0.02

-0.12

.PSI

1.67

-1.69

S.Korea

KRW=KFTC

-0.46

-3.34

.KS11

1.07

8.60

Singapore

SGD=

-0.07

-1.26

.STI

0.06

2.24

Taiwan

TWD=TP

+1.47

+1.83

.TWII

0.61

7.26

Thailand

THB=TH

-0.20

-0.47

.SETI

0.96

3.30





(Reporting by Shruti Sonal in Bengaluru; Editing by Amy Caren Daniel)

((Shruti.Sonal@thomsonreuters.com; Twitter: @shrutisonal26;))