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EMERGING MARKETS-Indonesia's rupiah, yields hit multi-week lows on Fed's tapering talks

    * Rupiah hits a 2-week low
    * Indonesian 10-year bond yields at over 3-week low
    * Yields on Malaysia, Thai bonds fall to around 1-1/2-month low

    May 20 (Reuters) - Indonesia's rupiah and benchmark bond yields fell to
multi-week lows on Thursday, spooked by the hint of tapering in the U.S. Federal
Reserve's April minutes of meeting that lifted the dollar and weighed on Asia's
other emerging currencies.
    South Korea's won, China's yuan and Malaysia's ringgit
 dipped 0.1% each, outdone by a 0.8% drop by the rupiah, which
backs some of emerging markets' highest-yielding debt.
    But losses were capped, as U.S. 10-year Treasury yields eased
off session highs and the dollar steadied after popping off a three-month
low. 
    Fed minutes published on Wednesday said "a number" of officials thought it
might be appropriate "at some point" to "begin discussing a plan for adjusting
the pace of asset purchases," in comments that surprised some investors.

    "For the record, the Minutes were unambiguous on the need to be defensively
dovish... there was no perceptible shift in the dovish mood or commitment by the
FOMC," Mizuho said in a client note, noting the Fed's caution on where several
indicators, such as inflation and employment, still stand. 
    The yield on Indonesia's 10-year bonds climbed to its highest
since late April, rising 11.79 basis points to 6.522%. Returns on Thai
 and Malaysian bonds also noticeably rose, sitting around
1-1/2 month highs.
    A Reuters poll found investors turned short on the won, the Singapore and
Taiwan dollar, and trimmed long bets on the yuan and Philippine peso, as
the region grapples with a surge in COVID-19 cases and fresh lockdowns.

    Singapore, Taiwan, Malaysia and Thailand have all imposed restrictions to
tame these outbreaks.
    Asia's emerging stocks markets were more mixed, with the Philippines
falling 0.8% and Indonesia rising 0.8%. The rest of the region traded
within those outer-ranges.     
    The Fed meets next in June and markets will be closely eyeing the outcome of
that meeting for changes to growth, inflation and unemployment forecasts and
whether rising consumer prices and a recovering U.S. economy will change its
outlook.
    Changes in policy outlook could prompt outflows from Asia's riskier assets. 
            
    HIGHLIGHTS: 
    ** Thailand's 10-year government bond yields are up 5 basis points to
1.775%, and Malaysia's 10-year benchmark yield edged up 1.09 bps to 3.226%
    ** Indonesian exports surge in April on higher commodity prices
    ** Singapore Airlines posts record $3.2 bln annual loss, to issue
convertible bonds
  Asia stock indexes and currencies at   0632 GMT
 COUNTRY      FX RIC      FX       FX     INDEX    STOCKS   STOCKS
                          DAILY %  YTD %           DAILY %  YTD %
 Japan                    +0.11    -5.36           0.19     2.38
 China                    -0.08    +1.38           0.12     1.21
 India                    +0.07    -0.07           -0.12    7.37
 Indonesia                -0.79    -2.42           0.83     -2.85
 Malaysia                 -0.08    -2.89           0.04     -2.83
 Philippines              -0.14    +0.37           -0.77    -13.19
 S.Korea                  -0.13    -4.05           -0.34    10.05
 Singapore                +0.08    -0.91           0.43     9.63
 Taiwan                   -0.03    +1.76           -0.56    8.89
 Thailand                 +0.26    -4.46           0.10     7.90
   
($1 = 31.3900 baht)

 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Simon Cameron-Moore
and Rashmi Aich)
  
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