(.) * Indonesia’s rupiah at 4-month low * MSCI EM currency gauge off a 10-week high * Singapore stocks down for 6th day * Market participants expect more aggressive BI easing * Indonesia stocks hover above 8,000-level By Sameer Manekar Sept 19 (Reuters) – Emerging Asian currencies weakened against a resurgent U.S. dollar on Friday as investors reassessed their positions after the Federal Reserve signalled a more calibrated approach to further monetary easing. Stock markets in developing Asia were broadly on the back foot: the MSCI gauge of EM Asia equities, dominated by China, Taiwan, and South Korea held just below a four-year peak. Singapore’s FTSE Straits Times drifted lower for its sixth consecutive session after reaching a record high last Thursday. Stocks in Taiwan and South Korea also fell from record levels scaled the previous day. Equities in emerging Asia rallied to record or multi-year highs in the run-up to Fed’s rate decision, further buoyed by growing policy easing bets. Despite a brief pullback equities, the broader sentiment remains that lower U.S. rates will drive flows into emerging markets. “The Fed signalling a rate cut cycle should continue to support risk appetite, so long as U.S. data does not materially deteriorate from here,” wrote Nomura analysts led by equity strategist, Chetan Seth. “We think valuations of larger Asian markets are on the higher side, but not yet at extreme levels.” EM currencies were broadly lower against the dollar: an MSCI index of global EM units slipped for a second consecutive day after reaching a 10-week high earlier in the week. Malaysia’s ringgit fell to its lowest in a week, and the rupiah fell to its weakest in more than four months. The latter has dropped about 1.5% since reputed finance minister, Sri Mulyani Indrawati, was abruptly sacked on September 8, with Wednesday’s surprise rate cut further adding to the pressure. Bank Indonesia’s increasingly pro-growth stance has markets pricing in more aggressive easing, which could also hurt the currency. The surprise rate cut helped Indonesia’s stocks zoom past the 8,000-mark on Wednesday, and its equity benchmark is headed for its best week in five, even amid rising concerns over fiscal discipline and the central bank’s autonomy. South Korea’s won hovered at a four-session low, while Taiwan’s dollar drifted lower from a one-month. Still, analysts broadly expect the dollar to stay under pressure in the near term, weighed down by prospects of further Fed policy easing. Thailand’s equities stabilised after dropping 0.7% the previous day, while the baht hovered around 31.85 per U.S. dollar-level, weakening 0.5% this week as the government plans to curb its strength to ease pressures on the export and tourism-reliant economy. HIGHLIGHTS: ** Yield on Indonesia’s 10-year government bond slips to three-week low of 6.304% ** Bank of Japan keeps interest rates steady, decides to start selling ETFs ** Thai king approves PM Anutin’s cabinet line-up, Royal Gazette shows ** Short bets on rupiah, rupee surge; bulls crowd yuan, baht – Reuters poll Asia stock indexes and currencies at 0414 GMT COUNTRY FX RIC FX DAILY FX YTD INDEX STOCKS STOCKS % % DAILY YTD % % Japan +0.51 +6.75 0.14 13.72 China India -0.14 -2.99 -0.23 7.27 Indones -0.37 -2.85 0.07 13.19 ia Malaysi -0.14 +6.38 -0.01 -2.66 a Philipp +0.02 +1.68 0.61 -3.94 ines S.Korea Singapo +0.01 +6.51 -0.29 13.53 re Taiwan -0.11 +8.77 -0.35 11.47 Thailan +0.11 +7.71 0.16 -7.22 d (Reporting by Sameer Manekar in Bengaluru)
