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EMERGING MARKETS-Asian currencies set to end pandemic-hit year on strong note

    * China state banks seen buying USD to ease yuan rally -
traders
    * Taiwan finds fist case of new coronavirus variant
    * Sime Darby shares weigh on Malaysian benchmark

    By Pranav A K and Anushka Trivedi
    Dec 31 (Reuters) - Asian currencies were on course to finish
the pandemic-hit year on a positive note, with the Malaysian
ringgit leading gains on Thursday as broader sentiment was
lifted by hopes of a vaccine-led economic recovery.
    The Chinese yuan, however, held back as traders
suspected state-owned banks were buying dollars to curb the
currency from rising too fast and breaching a key level of 6.5
per dollar.
    The yuan has risen rapidly since May and is set to mark its
first annual gain in three as a weaker dollar, the widening
yield gap between China and the United States and Beijing's
effective coronavirus containment underpinned gains in the
currency.
    Other emerging currencies in the region were broadly firmer
after the dollar weakened as investors continued to bet
that COVID-19 vaccine rollouts will help the economy towards a
more sustainable recovery. 
    "A smooth vaccine rollout can be a game-changer," said
Christopher Wong, a senior foreign exchange strategist at
Maybank
    "Global economy could be closer to a more sustainable
recovery trajectory amid unprecedented fiscal and monetary
support." 
     China's outperformance has also helped regional units, with
the Taiwanese dollar on course to be the best performer
in Asia this year as it firmed as much as 1.5% to take annual
gains to about 7%. 
    Investors have lauded the island's handling of the pandemic,
while a global shift to working remotely boosted demand for its
tech products.
    Malaysian ringgit strengthened 0.6% on Thursday,
while Singapore dollar also gained some ground.
    Emerging Asia's currencies stand to benefit from a recovery
in economic growth next year, with trade-linked Taiwan dollar,
Singapore dollar, won and yuan appearing as winners, whereas low
interest-rate and inflation environment should support the
region's carry trade favourites, Wong said.
    A slump in shares of Sime Darby Plantation knocked
Malaysian stock index sharply lower after the United
States banned imports of palm oil from the producer over
allegations of forced labour.
    Stock markets in the Philippines, Indonesia, Thailand, Japan
and South Korea were closed for a holiday. 

    
    HIGHLIGHTS:
    
    ** Singapore GDP to extend decline in Q4 - Reuters poll
    ** Top losers on FTSE Bursa Malaysia Kl Index
include Sime Darby Plantation Bhd, down 3.29%, and
Press Metal Aluminium Holdings Bhd, down 1.88%
    ** Singapore's 10-year benchmark yield is down 1.7 basis
points at 0.839%
    
    
 Asia stock indexes and currencies at                                                      
 0458 GMT                                                                      
 COUNTRY       FX RIC      FX DAILY %  FX YTD           INDEX  STOCKS DAILY %  STOCKS YTD %
                                            %                                  
 Japan                          +0.02   +5.29                            0.00         16.01
 China                          -0.08   +6.63                            0.83         12.87
 India                          +0.30   -2.33                            0.04         14.95
 Malaysia                       +0.62   +1.97                           -0.55          2.93
 Philippines                    +0.00   +5.50                            0.00         -8.64
 Singapore                      +0.01   +1.63                           -0.89        -11.76
 Taiwan                         +0.00   +5.61                            0.16         22.63
 
    

 (Reporting by A K Pranav and Anushka Trivedi in Bengaluru;
Editing by Anil D'Silva)
  
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