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* Graphic: World FX rates tmsnrt.rs/2egbfVh
* Graphic: Foreign flows into Asian stocks tmsnrt.rs/3f2vwbA
* Malaysian ringgit hits over six-month high
* Indian rupee tracks best day in two months
By Shashwat Awasthi
Sept 1 (Reuters) - Indonesia's rupiah weakened on Tuesday as
the country's inflation rate in August cooled to its lowest in
two decades, while other emerging Asian currencies benefited
from robust Chinese factory activity data and weakness in the
U.S. dollar.
The rupiah eased 0.2% after three sessions of gains,
and Jakarta stocks retreated to trade flat after
inflation eased below the central bank's target range, as the
country continues to battle a surge in coronavirus cases.
Lower inflation puts more pressure on Indonesia's central
bank to reduce interest rates further, potentially reducing the
return of one of foreign investors' favourite Asia currency
carry trades and weakening the attraction of the rupiah.
There are, however, also concerns over the balance of policy
in the country, with the central bank's hands tied by the
rupiah's weakness this year. It is the biggest faller among
Asia's emerging currencies this year, having lost roughly 5%.
The dip in the currency on Tuesday contrasted with bullish
gains across Asia, as the Caixin/Markit survey of manufacturing
purchasing managers showed activity in China expanding at the
fastest clip in nearly a decade in August.
The Malaysian ringgit, often proxy for China's yuan,
firmed 0.4% to its highest since Feb.19, while the Singapore
dollar and the Thai baht added 0.3% and 0.4%,
respectively.
India, which suffered its worst economic contraction on
record in the June quarter, saw a rebound with the rupee
set for its best day since July 2 and shares
recouping some of Monday's steep losses.
Taiwan's dollar climbed 0.6% and was on course for
its best day since March 20, as the country established a new
bilateral economic dialogue with the United States amid
increasing geo-political jostling with China.
Further losses in the greenback also provided more support,
with a number of leading "bears", or those betting on further
losses, arguing its decline has only just begun following last
week's shift in Federal Reserve policy to favour higher
inflation and growth over price control.
Among stocks, South Korea stood out with a near 1%
rally after Asia's fourth-biggest economy unveiled plans to ramp
up spending in the next few years to combat pandemic-induced
economic weakness.
HIGHLIGHTS
** Singapore's 10-year benchmark yield is down 3.7 basis
points at 0.982%
** Top losers on the Singapore STI include CapitaLand
Commercial Trust down 2.38%, Capitaland Mall Trust
down 2.04% and SATS Ltd down 2%
** In the Philippines, top index gainers are Universal
Robina up 3.99%, SM Investments up 2.65% and
Bloomberry Resorts up 2.12%
Asia stock indexes and currencies at 0418 GMT
COUNTRY FX RIC FX DAILY % FX YTD % INDEX STOCKS DAILY % STOCKS YTD %
Japan +0.24 +2.81 -0.11 -2.29
China +0.42 +2.10 0.04 11.38
India +0.00 -3.03 1.01 -5.47
Indonesia -0.14 -4.80 0.06 -16.79
Malaysia +0.43 -1.35 0.11 -3.89
Philippines +0.09 +4.57 0.30 -24.48
S.Korea +0.37 -2.28 1.01 6.92
Singapore +0.27 -0.88 -0.51 -21.82
Taiwan +0.60 +2.57 0.52 5.50
Thailand +0.39 -3.36 0.12 -16.94
(Reporting by Shashwat Awasthi in Bengaluru)
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