EMERGING MARKETS-Indonesia's rupiah leads Asian FX higher as U.S. inflation concerns ease

    * Rupiah at one-month high on the dollar
    * Fed, BoJ, Bank Indonesia policy meetings next week

    By Nikhil Nainan
    June 11 (Reuters) - Indonesia's rupiah led gains across
Asia's risk-sensitive currencies on Friday after U.S. inflation
data was enough to convince investors that the rise in prices
may be temporary.
    South Korea's won and Thailand's baht
gained around 0.5% as the dollar nursed small losses following
the report. Traders in Asia had been cautious all week as they
watched for any signal in the data that may prompt the Federal
Reserve to discuss early tapering of its massive stimulus.

    U.S. Treasury yields fell to lows not seen since
early March at one point in Asian trade, with traders saying
short-covering was driving the rally. 
    "With the global market backdrop turning more constructive
for bond investments, investors may re-focus on yield
differentials," OCBC Bank analysts said in a note. 
    Asia's emerging market currencies and bonds, though
considered riskier, traditionally yield more than their peers in
developed markets.
    The yield on Indonesia's 10-year bonds, which
offer one of the highest returns in emerging markets, fell to
its lowest since mid-February before rebounding to levels seen
earlier this week.    
    With U.S. inflation data out of the way, focus will now turn
to the Fed's policy meeting next week, which will happen
alongside meetings by central banks of Indonesia, Taiwan and
    Stocks markets in the region also largely gained, with South
Korea leading the way with a 0.8% rise, while Thailand
, the Philippines and others rose no more than
half a percent. 
    In a sign of confidence, the Thai central bank allowed banks
to pay interim dividends, saying they have sufficient capital to
deal with the impact of COVID-19 outbreaks. The country's top
banks were up around 1%.
    In Singapore, shares were roughly flat and the local
dollar marginally higher. 
    The city-state plans a phased easing of its COVID-19
restrictions from next week. Although bets on the reopening was
largely factored in, analysts say the bank-and-landlord-heavy
Singapore benchmark has further room to rise.
    Carmen Lee, head of OCBC investment research, said there are
sectors "which have not done as well as, and not priced as much
of the optimism," adding that the financial sector has done
well, but has more upside.    
    ** Indonesian 10-year benchmark yields rise 8 basis points
to 6.424%​​
    ** Thailand's 10-year government bond yields fell 2 basis
points to 1.67%​​
    ** S.Korea to begin normalising monetary policy when economy
sustains recovery - central bank       
 Asia stock indexes and currencies at   0632 GMT
 COUNTRY      FX RIC      FX       FX     INDEX    STOCKS   STOCKS
                          DAILY %  YTD %           DAILY %  YTD %
 Japan                    -0.05    -5.60           -0.03    5.48
 China                    +0.09    +2.21           -0.39    3.56
 India                    +0.09    +0.11           0.35     12.95
 Indonesia                +0.39    -1.06           -0.03    2.12
 Malaysia                 +0.16    -2.24           -0.41    -3.30
 Philippines              +0.06    +0.67           0.47     -3.25
 S.Korea                  +0.45    -2.21           0.76     13.08
 Singapore                +0.11    -0.08           0.06     11.28
 Taiwan                   +0.34    +3.16           0.32     16.84
 Thailand                 +0.42    -3.48           0.50     12.70
 (Reporting by Nikhil Kurian Nainan in Bengaluru, additional
reporting by Chen Lin in Singapore; Editing by Kenneth Maxwell
and Sriraj Kalluvila)