EMERGING MARKETS-Mixed messages for Asia in Fed's new strategy

    * Graphic: World FX rates tmsnrt.rs/2egbfVh
    * Graphic: Foreign flows into Asian stocks tmsnrt.rs/3f2vwbA
    * Singapore shares set to snap two-day losing streak
    * Outlook for lower long term U.S. rates buoy Asia FX
    * Spike in COVID-19 infections hits Indonesian markets

    By Shriya Ramakrishnan
    Aug 28 (Reuters) - Asian currencies edged up on Friday as
investors bet that the U.S. Federal Reserve's new strategy to
lift inflation and spur growth will keep its interest rates
lower for longer, supporting rate differentials with the
region's higher-yielding emerging markets.
    Taiwan's dollar again led gains, up more than half
a percent, while the Philippine peso rose around 0.3%,
while South Korea's won and the Singapore dollar
 were more subdued, edging up around 0.1%.
    "Powell's speech is bearish for the USD over the medium to
long term because U.S. real interest rates will have room to
fall further into negative territory," said Joseph Capurso, head
of international economics at CBA. 
    The broader message from the Fed of more efforts to boost
growth pushed U.S. 10-year bond yields higher, however,
providing some support to the dollar and keeping a lid on flows
into riskier Asian assets. 
    Yields on long-dated government bonds for Thailand
 and Indonesia were up 7.5 and 6.4 basis
points (bps) each, and both the Indonesian rupiah and
Malaysian ringgit traded lower on the day. 
    "If the U.S. curve steepens by more than 50-75 bps from
here, the impact on Asian markets could be material," said
Duncan Tan, interest rates strategist at DBS. 
    "In that scenario, we would likely see reallocation of
global capital away from Asia and to the U.S., leading to higher
rates and weaker currencies in Asia." 
    In Indonesia, the rupiah weakened 0.2% and stocks
slipped as the country reported its biggest daily spike in
coronavirus infections.
    Singapore shares rose 1.8% following overnight gains
on Wall Street, while Thai shares were up about half a
    South Korea's export-focused KOSPI also recovered
from a more than 1% fall in the previous session. Facing a surge
in new coronavirus cases, the government decided to extend
current social distancing measures instead of moving to tougher
restrictions, easing concerns about further economic fallout.

    ** Malaysia's 10-year benchmark yield is up 2.9
basis points at 2.65%
    ** Top gainers on the Singapore STI include Singapore
Airlines Ltd up 3.58% at S$3.76, SATS Ltd up
3.07% at S$3.02, Keppel Corporation Ltd up ​ 3.06% at
    ** In the Philippines, top index losers are Megaworld Corp
 down 3.32% at 2.91 peso; Ayala Land Inc down
3.03% at 28.8 peso; SM Investments Corp down 2.63% at
850 peso
  Asia stock indexes and                                    
 currencies at   0427 GMT                             
                      DAILY  YTD %                 S   YTD %
                          %                    DAILY  
 Japan                -0.22  +1.70              0.56   -1.34
 China     <CNY=CFXS  +0.25  +1.25              0.51   10.39
 India                 0.00  -3.29              0.61   -4.43
 Indonesi             -0.17  -5.42             -0.78  -15.40
 Malaysia             -0.07  -2.01             -0.33   -2.46
 Philippi             +0.28  +4.57             -0.72  -24.77
 S.Korea   <KRW=KFTC  +0.11  -2.31              0.69    7.41
 Singapor             +0.13  -1.42              1.82  -20.39
 Taiwan               +0.52  +2.55             -0.47    6.17
 Thailand             +0.06  -4.13              0.56  -15.55

 (Reporting by Shriya Ramakrishnan in Bengaluru; Editing by
Patrick Graham and Kim Coghill)

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