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EMERGING MARKETS-Malaysia shares drop nearly 1%, rupiah slips ahead of Fed minutes

    * Malaysia, Singapore shares down close to 1%
    * Taiwan dollar gains 0.4%, hits 1-week high
    * Thai cenbank says financial system vulnerable to COVID-19
spike
    * Thai cabinet approves $22.3 bln for COVID-19 response

    By Nikhil Nainan
    May 19 (Reuters) - Malaysian stocks and Indonesia's rupiah
led losses on Wednesday, as investors trimmed exposure to Asia's
risk-sensitive currencies and equities markets after a soft
session on Wall Street and worries around the resurgence of
COVID-19 cases in the region.
    The rupiah, favoured by foreign investors seeking to
tap Indonesia's high-yielding debt, fell 0.3% with most of
Asia's other emerging currencies flat to slightly lower.
Taiwan's dollar stood out with a 0.4% gain.
    Malaysian and Singapore stocks fell close to
1%. 
    "Sentiment is likely to remain cautious as a viral
resurgence in parts of Asia remains on top of traders' minds,"
Margaret Yang, a DailyFX strategist, said. 
    The broad weakness in the region comes ahead of minutes from
the Federal Reserve's most recent meeting later on Wednesday
that is expected to confirm that policymakers think a rate hike
is still some time away.
    Singapore, Taiwan and Malaysia have all imposed coronavirus
measures to combat new outbreaks, amid worries of more
contagious variants, at a time when the West is easing
restrictions. Vaccination drives in Asia have also been slow.
    "Asian central banks have generally been held back by the
virus situation," Duncan Tan, a rates strategist at DBS, said in
a client note.
    "We don't think Asia can be expected to deviate from the
global policy normalisation trend for an extended period of
time," he added, referring to other central banks in advanced
and emerging economies that are turning less dovish as they
watch over rising commodity prices.
    Inflation remains a worry as recent data shows consumer
prices rising in the United States, though the Fed has thus far
stuck to the narrative that it would be transient and monetary
policy should stay accommodative.
    Minutes from the Thai central bank's latest meeting showed
policymakers viewed Thailand's financial system as more
vulnerable from the latest coronavirus outbreak, posing
significant risks to the economy.
    The Thai cabinet approved a further 700 billion baht ($22.26
billion) of borrowing on Tuesday to support the government's
COVID-19 response. 
    Meanwhile, the Taiwan dollar hit a one-week high against the
greenback. 
    Officials on Tuesday said they expected limited impact on
Taiwan's economy and its key semiconductor industry from the
COVID-19 outbreak.
    Markets in South Korea and Hong Kong were closed for
holidays. 

    HIGHLIGHTS:
    ** Indonesian 10-year benchmark yields rise 7 basis points
to 6.475%
    ** Taiwan calls for fair access to vaccines
    ** Singapore seeks COVID-19 vaccination for all adults by
August    
  Asia stock indexes and currencies at   0330 GMT
 COUNTRY      FX RIC      FX       FX     INDEX    STOCKS   STOCKS
                          DAILY %  YTD %           DAILY %  YTD %
 Japan                    -0.06    -5.23           -1.40    2.05
 China                    -0.05    +1.56           -0.46    1.14
 India                    0.00     +0.03           0.00     8.06
 Indonesia                -0.28    -1.89           -0.44    -2.85
 Malaysia                 0.00     -2.55           -0.87    -3.06
 Philippines              +0.14    +0.48           -0.36    -12.85
 S.Korea                  -        -3.92           -        10.43
 Singapore                -0.07    -0.71           -0.76    9.67
 Taiwan                   +0.39    +2.29           -0.19    9.38
 Thailand                 +0.06    -4.65           0.04     8.14
 ($1 = 31.4400 baht)

 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by
Jacqueline Wong)
  
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