EMERGING MARKETS-Indonesia's rupiah hits 1-month low on dovish, Fed and virus worries

    * Rupiah set for worst day since Feb. 26
    * Won hits lowest since May 20
    * Taiwan rate decision due
    * Graphic: World FX rates
    * Asian stock markets:

    By Shashwat Awasthi
    June 17 (Reuters) - Indonesia's rupiah was set for its worst
day in four months on Thursday, as a double whammy of rising
COVID-19 cases and a hawkish turn by the U.S. Federal Reserve
eclipsed its central bank's promise to support the currency
    Other emerging Asian currencies were also weaker, led by a
1% slide in South Korea's won, as the dollar hit
two-month highs after the Fed signalled it would raise interest
rates earlier than expected and consider tapering bond buying.

    Bank Indonesia (BI), which has cut rates by 150 basis points
and injected over $57 billion worth of liquidity since 2020, met
expectations by leaving rates at 3.50% and pledged to further
strengthen measures to stabilise the rupiah.
    The currency fell 0.7% to its lowest level in nearly a
month, having weakened as much as 0.9% following the Fed readout
overnight and Indonesia's highest daily COVID-19 infections
tally since late-February.
    Indonesian three-year benchmark yields pared
earlier gains and were up 1.1 basis point at 4.659%, while
Jakarta's equity index edged 0.1% lower.
    Even as rising infections threaten to stifle Indonesia's
economic recovery, "emergent macro-stability risks" limit BI's
options to ease policy further, Mizuho analysts said.
    "This will be exacerbated following the hawkish surprise
from the U.S. Fed overnight, which we expect will increase
depreciation pressures on the IDR."
    BI's decision also came on the heels of the World Bank
suggesting the country keep its monetary policy accommodative
and make the rupiah exchange rate flexible amid external
    The Fed's indications on policy tightening could prompt
central banks in emerging markets to soon follow suit, which
could cycle cash out of those markets.
    A Reuters poll showed that investors had trimmed long bets
on most of Asia's emerging currencies, partly as they weigh the
prospect of tighter monetary settings.
    "The stage is set for what I feel is a period of somewhat
higher volatility as the narrative changes and traders adjust to
a future reduction in liquidity conditions," said Chris Weston,
head of research at broker Pepperstone.
    Philippine shares, which have soared more than 11% in
the last three weeks, fell over 1% and suffered their biggest
one-day drop in more than a month.
    Outperforming their regional peers, stocks in Thailand
 gained 0.3% after the government said it planned to
reopen the nation to visitors within 120 days and kick-start the
tourism-reliant economy.
    If the government's plan to fully reopen the country and
procure vaccines is successful, it would give the economy a shot
in the arm in the country's peak tourist season in the fourth
quarter, analysts at Phillip Capital said in a note.
    ** In the Philippines, top index losers are Bloombery
Resorts down 2.4%, Universal Robina down
2.3%, and Ayala Land down 2.3%.
    ** Top gainers on Thailand's SETI include Thai Textile
Industry up 22.02%, Jasmine Telecom Systems up
18.8%, and Finansia Syrus Securities up 18%.
   Asia stock indexes and currencies at 0730 GMT                                  
    Japan                     +0.03       -6.71                 -0.93           5.74
    China                     -0.51       +1.53                  0.21           1.51
    India                     -0.64       -0.99                 -0.32          12.42
  Indonesia                   -0.73       -2.09                 -0.06           1.60
   Malaysia                   -0.46       -2.78                 -0.50          -3.49
 Philippines                  -0.25       -0.72                 -1.23          -3.53
   S.Korea                    -1.17       -3.91                 -0.42          13.62
  Singapore                   -0.16       -1.29                  0.13          10.54
    Taiwan                    -0.22       +2.63                  0.48          18.04
   Thailand                   -0.64       -4.46                  0.22          12.35
 (Reporting by Shashwat Awasthi in Bengaluru; Editing by Aditya