Emerging markets: Philippine stocks cheer dovish central bank but Evergrande keeps Asia FX muted

MANILA, Sept 24 (Reuters): Most emerging Asian currencies softened on Friday as investors remained wary of a fallout from debt-laden property developer China Evergrande, while Philippine shares outpaced regional peers after a dovish stance from the country's central bank.

Evergrande bondholders were spooked by worries that the company was inching closer to a potential default as an interest payment deadline expired on Thursday without any announcement from the company.

The reaction in FX markets was timid, however, partly due to reports that Chinese regulators had issued instructions to Evergrande to help it avoid a near-term default on dollar bonds.

The reports suggest "the government has officially broken its silence on the issue and is in the process of ensuring the issue gets resolved without wider repercussions on financial/social/economic stability," analysts at Maybank said in a note.

The yuan was a tad weaker on Friday, while Indonesia's rupiah and the Philippine peso edged 0.1% and 0.2% lower, respectively.

Manila's benchmark index climbed as much as 1% and headed for its fourth straight day of gains after Bangko Sentral ng Pilipinas (BSP) on Thursday looked past increasing inflation pressures to keep its monetary policy loose.

The central bank raised its average inflation forecasts for 2021 through 2023 but expects inflation to ease to 3.3% next year from a forecast of 4.4% this year.

"With headline inflation slowly returning to BSP's inflation target band of 2%-4%... and slow vaccination progress likely to weigh on activity through year-end, we expect BSP to keep the policy stance accommodative for the rest of the year," Goldman Sachs analysts said.

Singapore's FTSE Strait Times index gave up 0.3%, while South Korea's Kospi fell as much as 0.2%, after daily Covid-19 cases hit record highs in both nations.

Singapore, which has inoculated more than 80% of its population, has seen a spike in cases recently after it relaxed some curbs, prompting it to pause further reopening.

Data showing the country's industrial output in August beat estimates had little effect on stocks and the Singapore dollar. Malaysian stocks dropped 0.4% as industrial firms weighed, handing back some gains made in the previous session.

Data showed the country's consumer prices in August rose 2% from a year earlier, slightly below expectations.

Most regional share markets were set for a muted weekly performance, as investors have largely taken the U.S. Federal Reserve's tapering plans in their stride this week, but still await updates from Evergrande. - Reuters