Emerging markets - Indonesia central bank hold rates; Asian forex gain as US yields ease while China cuts mortgage rates


JAKARTA, Jan 20 (Reuters): Asia's emerging market currencies edged higher on Thursday, as easing US Treasury yields nipped dollar gains, while central banks in Indonesia and Malaysia left their policy rates unchanged ahead of the key Federal Reserve meeting next week.

As inflation concerns herald a global shift toward tighter monetary policy, mainly in developed economies, central banks in Asia appear to be moving at a slower pace to ensure their economies are stable and recovery is not hampered.

China cut its mortgage reference rate for the first time in nearly two years, as economic data this week showed further weakening in consumption and the troubled property sector.

As expected, central banks in Indonesia and Malaysia left their policy rates unchanged.

Reuters polls conducted ahead of the meetings showed economists expected both Bank Negara Malaysia and Bank Indonesia to wait until the second half to start raising rates.

The rupiah and ringgit gained 0.1% each, and remained unchanged after their respective central banks' decisions.

Stocks in Jakarta gained 0.4%, while Kuala Lumpur was flat.

With some of the highest-yielding debt in emerging markets, Bank Indonesia may come under pressure to kick off its own tightening cycle to avert currency weakness and potential large capital outflows if the Fed starts to signal a faster pace of rate hikes.

This week, U.S. Treasury yields jumped and investors raised bets that the Fed will have to act more aggressively to tighten monetary policy to stem out-of-control inflation. Shares in Seoul snapped a five-day run of losses, rising 0.7%.

Public subscriptions for the mega-$10.8 billion LG Energy Solutions' initial public offering (IPO) ended on Wednesday, with investors bidding for a record 114 trillion won ($95.82 billion) worth of shares, reducing volatility in the market.

In Singapore, stocks continued to hover around 2019 highs, with the city-state's first special purpose acquisition company (SPAC) making its market debut. Vertex Venture Holdings, the SPAC and Temasek subsidiary, opened higher than its offer price. - Reuters

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