EMERGING MARKETS-Indonesia' rupiah firms as central bank sticks to expectations

* Graphic: Foreign flows into Asian stocks https://tmsnrt.rs/3f2vwbA
* Indonesia's central bank cuts interest rates by 25 bps, as
expected
* BI says further easing possible but will keep rupiah
stability
in mind
* Second-wave fears continue to rattle markets

By Nikhil Nainan
June 18 (Reuters) - Indonesia's rupiah gained on Thursday
after the central bank cut interest rates as widely expected,
signalling it may ease further but would keep the currency's
stability in mind.
Bank Indonesia (BI) cut rates by 25 basis points
IDCBRR=ECI for the third time this year, stopping short of a
more aggressive move that might have weakened the currency. It
signalled it may still ease further but would prioritise the
currency's stability. The rupiah IDR= strengthened as much 0.4% against the
dollar after the decision, having trailed broader gains in other
Asian currencies earlier in the day.
"Unlike in May, BI now seems more confident of not spooking
the rupiah market with a rate cut," said Julian Wee, an
investment strategist at Credit Suisse in Singapore.
Equity markets .JKSE , however, fell 1.3% as the central
bank trimmed its outlook for 2020 GDP growth to 0.9%-1.9% from
2.3%.
Southeast Asia's largest economy is facing its first
contraction since 1999 in the second quarter due to restrictions
imposed to control the spread of the coronavirus. The central
bank governor said growth would bottom in the second quarter and
then recover.
"Portfolio inflows will remain contingent on growth
prospects not deteriorating sharply," Wee added. "That in turn
hinges on how well the virus outbreak is contained, which is
beyond BI's control."
Away from Indonesia, Asia's foreign exchange markets
advanced against the greenback, with the yuan CNY=CFXS and
South Korea's won KRW=KFTC the best performers.
Policymakers in China vowed to keep supporting financial
markets and the economy as the country recovers from the
coronavirus outbreak earlier this year. However, worries over a fresh wave of coronavirus
infections, as seen in the United States and China, weighed on
broader Asian markets as some fear countries may have to
backtrack or slow the reopening of their economies after months
of lockdown.
"Now that the reopening trade is well priced in, markets
have to deal with the trickier issue of evaluating what the
economic recovery will look like beyond the next couple of
months," said Paul O'Connor, head of multi-asset at Janus
Henderson Investors.
Asia stock indexes and currencies at 0946 GMT
COUNTRY FX FX FX INDEX STOCKS STOCKS
RIC DAILY % YTD % DAILY % YTD %
Japan JPY= +0.03 +1.53 .N225 -0.45 -5.50
China CNY=CFXS +0.04 -1.66 .SSEC 0.12 -3.63
India INR=IN +0.01 -6.25 .NSEI 2.23 -16.99
Indonesia IDR= +0.11 -0.93 .JKSE -1.25 -21.82
Malaysia MYR= +0.14 -4.28 .KLSE -1.40 -5.28
Philippines PHP= -0.09 +1.07 .PSI 1.06 -18.77
S.Korea KRW=KFTC +0.49 -4.27 .KS11 -0.35 -2.92
Singapore SGD= +0.10 -3.38 .STI -0.15 -17.29
Taiwan TWD=TP +0.09 +1.52 .TWII 0.12 -3.74
Thailand THB=TH +0.42 -3.76 .SETI -0.23 -13.09