EMERGING MARKETS-Asian FX kick off new year on a firm note, rupiah climbs 1%

    * Indonesia 10-year bond yields drop, rupiah at 6-mth high
    * Rupiah may continue to outperform - analyst
    * Thai shares fall 1% on virus curbs threat

    By Anushka Trivedi
    Jan 4 (Reuters) - Emerging Asia's currencies began the new
year on the front foot as investors bet that a vaccine-led
recovery from the COVID-19 pandemic would keep the dollar
subdued, with the Indonesian rupiah climbing to a more than
six-month high.     
    The greenback continued to retreat after posting its
largest annual loss since 2017 last year, buoying the Taiwanese
dollar 1.5%, while the Malaysian ringgit and
the South Korean won advanced 0.6% and 0.5%,
    The Chinese yuan jumped 0.9% and blew past the
crucial 6.5 per dollar level, anchoring gains in regional
    "The weaker U.S. dollar is set to be a prolonged theme in
2021," said Han Tan, market analyst at FXTM, adding that
emerging-market currencies would stay supported in that case,
with optimism over vaccine rollouts adding to gains.
    "Any ramp up in expectations for more incoming U.S. fiscal
stimulus or other boosts to inflationary pressures should
translate into more downward pressure on the dollar," he said.
    Meanwhile, the rupiah broke the 14,000 per dollar
mark on Monday, trading 1.3% higher at about 13,860, whereas
Indonesia's 10-year benchmark yields fell 16.1 basis
points at 5.937%. Yields fall when prices rise.
    After concerns over the central bank's autonomy in Jakarta,
positive vaccine developments toward the end of 2020 helped the
rupiah recoup most of its losses, with investors continuing to
flock to Indonesia's high-yielding debt amid a weak dollar.
    "The rupiah may continue its outperformance... the global
hunt for yields should drive more inflows into its bond markets
which would be a major supportive element for the Indonesian
currency," Tan added.
    Most regional equities were stronger amid optimism in
markets, with South Korea, Indonesia and the
Philippines shares firming between 1% to 2.3%.
    However, the Malaysian bourse was weighed down by
the heavyweight glove makers that benefited during the early
months of the pandemic.
    Thai shares dropped 1% as the government mulled more
restrictions amid a second wave of coronavirus infections and
after it reported its first known case of a more contagious
variant of the virus on Sunday.

    ** The Singapore dollar notches a near 3-year high
after Q4 GDP contracts slightly less than expected 
    ** Top losers on Malaysia Index are glove makers
Hartalega Holdings Bhd down 13.7%, Top Glove Corp
 down 10.5% & Supermax Corp down 6.7% 
    ** Top gainers on the Jakarta stock index: Trust
Finance Indonesia Tbk PT up 18.4% and Energi Mega
Persada Tbk PT up 13.2%
 Asia stock indexes and currencies at                                                  
 0510 GMT                                                                  
 Japan                           +0.17     +0.21                    -0.67         -0.67
 China                           +0.89     +0.89                     0.91          0.91
 India                           +0.24     +0.16                     0.48          0.74
 Indonesia                       +1.26     +1.26                     1.00          1.00
 Malaysia                        +0.63     +0.63                    -1.63         -1.63
 Philippines                     +0.03     +0.03                     0.81          0.81
 S.Korea                         +0.48     +0.47                     2.27          2.27
 Singapore                       +0.34     +0.27                     0.18          0.18
 Taiwan                          +1.49     +1.40                     1.35          1.35
 Thailand                        +0.13     +0.20                    -0.53         -0.53

 (Reporting by Anushka Trivedi in Bengaluru. Editing by Gerry