EMERGING MARKETS-Indonesia's rupiah drops, stocks set for worst week since March

* Indonesia stocks swing sharply between positive and
negative
territory
* 10-year Indonesia bond yields rise to highest since
late-July
* Graphic: Foreign flows into Asian stocks https://tmsnrt.rs/2ReJOMr

By Nikhil Nainan
Sept 11 (Reuters) - Indonesian shares swung wildly and the
rupiah fell to its weakest since May on Friday as fresh COVID-19
restrictions in Jakarta laid bare recovery hopes, while broader
Asia was mixed after falls in Wall Street overnight.
After falling almost 3% early in the session, the Jakarta
share market .JKSE recovered some poise but was still on
course for its worst week since March while the rupiah IDR= ,
by far the region's worst performer this year, lost nearly 1%.
Despite Bank Indonesia intervening to protect the rupiah,
which backs one of Asia's most popular bond markets for foreign
investors, the currency has still dropped almost 2% in the two
weeks since investors took fright at a parliamentary panel's
recommendations for changes to the central bank law.
Investors fear the proposed changes could reduce the central
bank's independence at a time when the economy is struggling
with rising COVID-19 cases and the global fallout from the
pandemic.
"Foreign investors were already concerned about proposed
changes to the central bank law that could erode Bank
Indonesia's independence," said Khoon Goh, ANZ's head of Asia
research.
"Now with the capital heading into lockdown, Indonesia's
economic recovery is in doubt and this will see further investor
caution, likely leading to near-term outflows."
Ahead of the open, Bank Indonesia said again that it would
intervene in the spot market to help stabilise the rupiah, a
carry trade favourite for foreign investors, while the yield on
10-year bonds climbed 11 basis points to 7.014%, its highest
since late July.
The bank holds a policy meeting next Thursday.
Other equity markets in emerging Asia were marginally lower,
with South Korean stocks .KS11 down the most, losing around
0.8%, taking a cue from the overnight selling of high-valued
U.S. tech stocks. .N
"With risk sentiment edgy, investors are likely to remain on
the sidelines heading into the weekend," said Edward Ng, an
Asian fixed income portfolio manager at Nikko Asset Management
in Singapore.
Currencies were mostly higher against a broadly weaker
dollar. Malaysia's ringgit MYR= advanced 0.2% after its
central bank held rates on Thursday in what some economists saw
as a sign it will hold off with further cuts this year.
HIGHLIGHTS:
** Indonesian 10-year benchmark yields up 11.3 basis points
to 7.014%
** In Jakarta: Top gainers include Pollux Properti Indonesia
Tbk PT POLL.JK and Rig Tenders Indonesia Tbk PT RIGS.JK ; top
losers was Acset Indonusa Tbk PT ACST.JK
** Malaysia's 10-year benchmark yield up 2.5 basis points at
2.712%
Asia stock indexes and currencies at 0348 GMT
COUNTRY FX RIC FX FX INDEX STOCKS STOCKS
DAILY % YTD % DAILY % YTD %
Japan JPY= -0.02 +2.32 .N225 0.30 -1.49
China CNY=CFXS -0.07 +1.82 .SSEC -0.21 5.83
India INR=IN +0.00 -2.82 .NSEI 0.00 -5.91
Indonesia IDR= -0.67 -6.97 .JKSE 0.75 -21.77
Malaysia MYR= +0.22 -1.54 .KLSE 0.59 -5.66
Philippines PHP= +0.12 +4.39 .PSI 0.95 -23.76
S.Korea KRW=KFTC -0.33 -2.73 .KS11 -0.78 8.19
Singapore SGD= +0.19 -1.67 .STI -0.49 -23.05
Taiwan TWD=TP +0.81 +2.82 .TWII -0.47 5.30
Thailand THB=TH +0.06 -4.38 .SETI 0.33 -18.02