EMERGING MARKETS-Asia FX gains as U.S. yields dip; India's rupee hits over 4-month low

    * RBI leaves rates unchanged as expected, announces bond
    * Rupee down as far as 1%
    * S.Korea's won at strongest level since Feb-end

    By Nikhil Nainan
    BENGALURU, April 7 (Reuters) - The Indian rupee plunged to
its lowest level in more than four months on Wednesday after the
central bank held rates, while Asia's other emerging currencies
gained as U.S. bond yields continued to retreat and eased
pressure on the region's assets.
    Stock markets throughout most of Asia gained with India
 leading the way, rising around 1%.
    South Korea's won advanced 0.3% to its strongest
level since late February as 10-year Treasury yields
extended their declines and put the dollar on the backfoot.
    The International Monetary Fund also raised its global
growth outlook to 6% this year, from 5.5% less than three months
ago, pointing largely to the U.S. recovery and unprecedented
public spending.
    Those reflation hopes provided an extra lift to the region,
though only just, ahead of minutes from the Federal Reserve's
March meeting, due later on Wednesday.
    "We expect the broader thematic play of reflation, higher
commodity prices, vaccine trade and sharper global economic
rebound to play up again," Maybank analysts said. 
    Cautioning that they still do not expect the dollar to be in
free fall as U.S. yields remain elevated, "Fed officials need to
show some signs of anxiety before UST yield and dollar can ease
more meaningfully." 
    The Reserve Bank of India (RBI) left rates unchanged, as
widely expected, at a time where daily COVID-19 cases are
surging and states reimpose restrictions.
    While the rupee fell nearly 1%, yields on the
benchmark 10-year bonds rose as far as 6.191% before
falling to 6.087% after the RBI announced a secondary market
government securities acquisition programme, where it would buy
1 trillion rupees worth of bonds from the market in the
April-June quarter.
    Siddhartha Sanyal, the chief economist at Bandhan Bank said
a key challenge for the RBI is to "maintain orderly conditions
in financial markets", noting large government borrowing and the
fresh surge in COVID-19 infections.
    More broadly, investors have also been recalculating their
expectations for when the Fed will tighten policy, a shift from
a month and half of rising U.S. bond yields and a surging dollar
spurred by financial markets thinking that the central bank will
have to abandon its pledge due to a fast-recovering economy. 
    The Fed has pledged not to raise interest rates until 2024,
while any indications of change could sap appetite for Asia's
higher-yielding currency and bond markets.
    South Korea, seen as a beneficiary from a global recovery
given its reliance on trade, reported its highest number of new
COVID-19 cases in three months, keeping a check on stock market
    ** Indonesian 10-year benchmark yields fell 13.3 basis
points to 6.536%
    ** Spike in long-term Thai govt bonds had limited impact on
economy minutes    
  Asia stock indexes and currencies at   0641 GMT
 COUNTRY      FX RIC      FX       FX     INDEX    STOCKS   STOCKS
                          DAILY %  YTD %           DAILY %  YTD %
 Japan                    -0.02    -5.94           0.12     8.33
 China                    -0.01    -0.20           -0.31    -0.03
 India                    -0.82    -1.32           0.98     6.05
 Indonesia                +0.00    -3.17           0.08     0.48
 Malaysia                 +0.10    -2.57           0.18     -2.79
 Philippines              -0.05    -1.20           0.93     -6.84
 S.Korea                  +0.30    -2.70           0.33     9.19
 Singapore                +0.02    -1.31           -0.34    12.41
 Taiwan                   +0.26    +0.25           0.45     14.14
 Thailand                 +0.26    -4.31           -0.92    7.99
 (Reporting by Nikhil Kurian Nainan and Sameer Manekar in
Bengaluru; Editing by Kim Coghill and Shailesh Kuber)