EMERGING MARKETS-Thai stocks jump as BOT says economy recovering

    * Graphic: World FX rates tmsnrt.rs/2egbfVh
    * Graphic: Foreign flows into Asian stocks tmsnrt.rs/3f2vwbA
    * BOT holds rates, says Q2 GDP seen better than forecast
    * Focus next on Reserve Bank of India's policy decision on

    By Rashmi Ashok
    Aug 5 (Reuters) - Thai stocks turned positive on Wednesday
after its central bank held interest rates as expected and
predicted second-quarter output would be better than forecast,
while warning it was ready to quell gains for the baht.
    The bank, which already has rates at a record low of 0.5%,
said exports were gradually recovering and expected inflation
back on target next year, while saying it does not want the baht
to rise "too fast" and has the tools to act.
    Thailand's economy relies heavily on its exports, which have
already fallen sharply in the pandemic, and appreciation of the
currency now would make its products more expensive and less
competitive globally.
    BOT also kept the door open for further easing with its
range of monetary tools, if necessary, which sparked talks of
the central bank turning to unconventional measures to manage
the economy.
    "This may sustain the noise about quantitative easing (QE)
and yield-curve control, however, I think it will remain a noise
rather than becoming a reality in the near term," ING economist
Prakash Sakpal said.
    "The negative interest rate is just a far cry for an
emerging economy and it's unlikely to serve the purpose of
boosting the demand. Absent any more easing via policy rates, or
QE, we are in for a prolonged policy stalemate," Sakpal added.
    Bangkok shares climbed 0.5% in response, while the
baht held its gains against the dollar. 
    Currencies and stocks across Asia were all higher, with the
ringgit, the won and the Taiwan dollar
 all up. 
    Indonesian stocks ticked lower after data showed the
economy shrank by a sharper-than-expected 5.32% in the second
quarter, the first time since 1999. The index later recovered to
gain 1%, while the rupiah barely budged.
    The Reserve Bank of India meets on Thursday, with consensus
split between a cut or hold to interest rates. 
    Soaring coronavirus cases, a plunge in manufacturing output
and lower chances of further fiscal stimulus due to
deteriorating public finances all build a case for further
monetary accommodation, analysts at ING said. 
    Analysts at DBS Research said they did not anticipate a cut
now, but predicted 50 basis point reduction in the second half
on mounting downside risks to growth.
    Perhaps as important as the decision will be the RBI's
guidance on a moratorium on loan repayments, which is set to
expire by August-end, and what that means for Indian banks
struggling with bad debts, they said. 
    ** Top gainers on the Thailand's SETI included JCK
International PCL up 14.52% and Global Consumer PCL
 up 14.29% 
    ** Thailand's 10-year government bond yields fell 2 basis
points to 1.2%​​ while 3-year benchmark yield rose 1 basis point
to 0.56%​​ 
    ** In the Philippines, top index gainers were BDO Unibank
Inc up 4.42% and Semirara Mining and Power Corp
 up 4.4% 
  Asia stock indexes and                                     
 currencies at   0814 GMT                               
                          DAILY  YTD %               S  S YTD
                              %                  DAILY      %
 Japan                    -0.02  +2.73           -0.26  -4.83
 China                    +0.33  +0.16            0.17  10.74
 India                    +0.19  -4.71            0.15  -8.69
 Indonesia                +0.21  -4.41            1.03  -18.6
 Malaysia                 +0.55  -2.55           -0.10  -0.91
 Philippines              +0.12  +3.30            1.01  -25.3
 S.Korea                  +0.45  -2.73            1.40   5.20
 Singapore                +0.18  -1.90            1.29  -20.9
 Taiwan                   +0.11  +2.03            0.73   6.71
 Thailand                 +0.23  -3.52            0.66  -15.2

 (Reporting by Rashmi Ashok in Bengaluru; Editing by Patrick
Graham and Rashmi Aich)

Source: Read Full Article