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EMERGING MARKETS-Yuan moves limit upside for Asia FX, stimulus hopes support stocks

    * Graphic: World FX rates tmsnrt.rs/2egbfVh
    * Graphic: Foreign flows into Asian stocks tmsnrt.rs/3lKhL5I
    * Taiwan dollar hits strongest level since June 2011
    * Indonesian stocks at near 1-month high
    * Malaysian shares fall on rising COVID-19 cases 

    By Shriya Ramakrishnan
    Oct 12 (Reuters) - Most Asian currencies inched lower on
Monday after a policy tweak by China's central bank pulled back
some of the yuan's gains, while stock markets across the region
rose as investors latched on to hopes a deal for U.S. stimulus
would be reached.
    An over 2% gain in Chinese shares also lent support
to regional equity markets. Indonesia shares rose up to
1% on easing of coronavirus curbs in the capital city of Jakarta
for the next two weeks. 
    The rupiah dipped slightly, ahead of Bank Indonesia's
meeting on Tuesday where it is widely expected to keep benchmark
rates steady at 4.00%, especially after concerns over the
central bank's independence have kept the currency under
pressure.
    Market participants also barely reacted to protests over a
new jobs law in Indonesia, which economists say could improve
the nation's investment climate. But protesters say the law
undermines labour rights and weakens environmental protections.
    A pullback in the yuan from a 17-month high kept
a lid on gains for most Asian currencies after the People's Bank
of China cut foreign exchange forward reserve requirements, seen
as aimed at tempering the yuan's recent strength. 
     "We believe the authorities are comfortable about the
overall flow picture, expecting that a removal of the policy
tool should not reverse the downtrend by USD-RMB," analysts at
HSBC Research wrote in a client note.
    The Singapore dollar, Malaysian ringgit and
Philippine peso traded flat to lower during the day,
while the Taiwan dollar once again outperformed with
gains of more than 1% to reach its highest since June 2011.  
    The Taiwan dollar, Asia's top performing currency so far
this year, has benefited from stronger exports, helped by demand
for laptops and tablets to support the work-from-home trend
during the pandemic.
    "Better COVID-19 management compared to peers in Asia and
the CBC (Taiwan's central bank) taking a hands-off approach to
the currency strengthening has enabled the trend to sustain,"
said Jingyi Pan, market strategist at trading firm IG Asia.
    Malaysian stocks drifted lower, weighed down by
concerns over a sharp spike in coronavirus infections over the
weekend.
    While Malaysia has so far kept a major contagion at bay,
several new infections have been traced in the wake of last
month's election in Sabah state, prompting authorities to impose
targeted lockdowns to curb the outbreak. 
    
    HIGHLIGHTS:
    ** Malaysia's 10-year benchmark yield is up 0.1
basis points at 2.711%
    ** Top gainers on the Jakarta stock index include
Citra Tubindo Tbk PT up 24.66% at 2730 rupiah, Bank
Permata Tbk PT up ​ 24.56% at 2460 rupiah
    ** Top losers on FTSE Bursa Malaysia Kl Index
include Sime Darby Plantation Bhd down 3.1% at 5
ringgit; Sime Darby Bhd down 2.85% at 2.39 ringgit;
CIMB Group Holdings Bhd down 2.22% at 3.09 ringgit
    
    
    
  Asia stock indexes and                                       
 currencies at   0707 GMT                                
 COUNTRY   FX RIC          FX     FX       INDEX  STOCK  STOCKS
                        DAILY  YTD %                  S   YTD %
                            %                     DAILY  
                                                      %  
 Japan                  +0.13  +3.00              -0.26   -0.41
 China                  -0.30  +3.72               2.62   10.09
 India                  -0.07  -2.46               0.09   -2.00
 Indonesi               -0.10  -5.51               0.83  -19.11
 a                                                       
 Malaysia               +0.00  -1.11              -0.79   -4.44
 Philippi               -0.16  +4.59               0.09  -24.03
 nes                                                     
 S.Korea                +0.57  +0.84               0.49    9.38
 Singapor               -0.07  -0.69               0.40  -21.09
 e                                                       
 Taiwan                 +1.25  +5.24               0.53    7.99
 Thailand               -0.03  -3.70               0.80  -19.15
 


 (Reporting by Shriya Ramakrishnan in Bengaluru; Editing by
Krishna Chandra Eluri)
  
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