Most Asian currencies, stocks gain ahead of Jackson Hole meet

By Archishma Iyer and Sherin Sunny

Aug 20 (Reuters) –The Indonesian rupiah led gains among emerging Asian currencies on Tuesday and its stocks hit a record high, while investors focusedon the Jackson Hole symposium later this week where the Fed could offer further hints on rate cuts.

The MSCI International Emerging Market Currency Index .MIEM00000CUS rose 0.2% to touch a fresh record high, while the Indonesian rupiah IDR= gained as much as 0.5% to trade at 15,470 per dollar,hitting its highest since early January.

“We view the Asian currency rebound as a recovery of the losses from the Fed’s ‘high for longer’ rates stance in the first half of this year,” senior FX Strategist Philip Wee from DBS wrote in a client note.

“There is scope for the South Korean won, Philippines peso and Indonesian rupiah to play catch up in recovering this year’s losses,” he added.

Other currencies such as the Malaysian ringgit MYR=, Taiwan dollar TWD=TP, Philippines peso PHP= and Thailand baht THB=TH traded between flat and 0.4% higher.

Investors will close watch the Jackson Hole symposium later this week, where Fed Chair Jerome Powell is likely to acknowledge the possibility of a rate cut in the September meeting.

Such a move could boost riskier Asian assets and drive a weakening trend in the dollar, with inflation also easing in most emerging Asian economies.

The dollar index =USD, a measure of the greenback against six major currencies, drifted lower overnight to 101.95, although it stayed steady during Asian hours.

“(EM Asia) central banks have room to cut interest rates. However, they are not in a hurry as they are avoiding capital flow and exchange rate volatility and will likely only ease once U.S. policy interest rates begin easing,” analysts from S&P Global Ratings said in a note.

Central banks in Thailand, Indonesia and South Korea are set meet this week, where all three are expected to stand pat on rates, contrasting with the Philippines’ central bank decision to slash its main policy rate last week.

Moreover, inflation prints from Singapore and Malaysia during the week are likely to set the tone for their respective central banks’ stances on rate cuts.

Elsewhere, China left its benchmark lending rates unchanged as expected. The yuan CNY=CFXS traded flat while stocks .SSEC fell almost 1%.

Among Asian shares, the Jakarta benchmark .JKSE advanced as much as 0.9% to a record high, while Manila stocks .PSI climbed about 1.7%, nestled near their early April highs.

Others such as Singapore .STI, Bangkok .SETI, Taipei .TWII and Seoul .KS11 traded between 0.1% and 0.8% higher.

HIGHLIGHTS:

** Indonesia’s benchmark 10-year bond yield at 6.693%

** China and Vietnam sign 14 deals from rail to crocodiles after leaders meet

** Parties backing Indonesia’s Prabowo close ranks to thwart rival’s Jakarta governor bid

Reporting by Archishma Iyer and Sherin Sunny in Bengaluru; Editing by Stephen Coates