June 3, 2020 / 6:13 AM / a month ago

EM ASIA FX-Indonesian rupiah hits near 3-month high as bonds extend rally

    * IDR bonds expected to remain highly sought-after - analyst
    * Economic recovery and more stimulus hopes help Asia FX
    * S. Korea unveils supplementary budget to fight virus

 (Adds text, updates prices)
    By Shriya Ramakrishnan
    June 3 (Reuters) - The Indonesian rupiah hit a near
three-month high on Wednesday as strong demand from
yield-seeking investors extended a rally in government bonds,
while most other Asian currencies gained on hopes of more
stimulus and a global economic recovery.
    Bank Indonesia sees room for further rupiah appreciation,
said Governor Perry Warjiyo, adding investors were more
confident about Southeast Asia's largest economy because of
prudent fiscal and monetary policies.
    The rupiah climbed 1.4% to 14,180 against the dollar
as investors piled into government debt, sending yields on the
benchmark 10-year bond down by 5 basis points to
7.177%, the lowest since mid-March.
    On Tuesday, the finance ministry raised 24.35 trillion
rupiah ($1.71 billion) in its first government bond auction
since the Eid al-Fitr holidays, which was more than four times
    "IDR bonds are expected to remain highly sought-after,
considering the dearth of yields across the fixed-income
landscape," said Han Tan, a market analyst at Cyprus-based
trading and investing firm FXTM. 
    "USD/IDR could return into the sub-14,000 territory on
sustained fund inflows, aided by high real rate differentials
and steady recovery in domestic and global economic conditions,
provided that the dollar continues its downward trajectory."    
    A gradual reopening of several regional economies, including
Singapore, Thailand, India and the Philippines, has supported
risk sentiment this week despite looming risks such as a second
wave of coronavirus infections and simmering Sino-U.S. tensions.
    The Singapore dollar and the Taiwan dollar
firmed 0.2% and 0.3% respectively, while the Chinese yuan
 inched down in onshore trade. 
    A private survey earlier showed China's services sector
returned to growth last month for the first time since January,
although employment and overseas demand remained weak.

    "It's tempting to see mainland China as a template for the
rest of the world for how quickly activity can bounce back. In
truth, the jury is still out on whether everyone else can follow
the same path," analysts at HSBC cautioned, referring to a
continued weakness in manufacturing activity across the region. 
    The South Korean won strengthened 0.7% to a more
than three-week high, while higher crude prices supported the
currency of Malaysia, a net exporter of the commodity. 
    South Korea unveiled a 35.3 trillion won ($28.8 billion)
supplementary budget aimed at lifting Asia's fourth-largest
economy, which is facing its worst growth since the 1998 Asian
financial crisis.
    The Indian rupee rose 0.4% to 75.03 per dollar
before giving up some gains.  
    Financial markets in Thailand were closed for a holiday.

  Change on the day at                                
        0519 GMT                                
  Currency                Latest bid  Previous     Pct
                                           day    Move
  Japan yen               108.480       108.66   +0.17
  Sing dlr                1.397         1.4002   +0.24
  Taiwan dlr              29.893        29.988   +0.32
  Korean won              1217.400      1225.4   +0.66
  Peso                    50.150         50.17   +0.04
  Rupiah                  14180.000      14380   +1.41
  Rupee                   75.260         75.36   +0.14
  Ringgit                 4.258          4.272   +0.33
  Yuan                    7.111         7.1045   -0.10
  Change so far in 2020                               
  Currency                Latest bid  End 2019     Pct
  Japan yen               108.480       108.61   +0.12
  Sing dlr                1.397         1.3444   -3.75
  Taiwan dlr              29.893        30.106   +0.71
  Korean won              1217.400     1156.40   -5.01
  Peso                    50.150         50.65   +1.00
  Rupiah                  14180.000      13880   -2.12
  Rupee                   75.260         71.38   -5.16
  Ringgit                 4.258         4.0890   -3.97
  Yuan                    7.111         6.9632   -2.08
 ($1 = 14,200.0000 rupiah)

 (Reporting by Shriya Ramakrishnan in Bengaluru; Editing by
Subhranshu Sahu)
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