EMERGING MARKETS-Indian stocks rally, rupee flat as RBI keeps door open to rate cuts

    * Graphic: World FX rates tmsnrt.rs/2egbfVh
    * Graphic: Foreign flows into Asian stocks tmsnrt.rs/3f2vwbA
    * Indian stocks climb after cenbank vows support, holds
    * Philippine markets had priced in harsh Q2 GDP data -
    * Indonesian rupiah weakens, large fiscal spending planned
in H2

    By Rashmi Ashok
    Aug 6 (Reuters) - India's rupee pulled back slightly while
stocks rallied on Thursday after the country's central bank kept
official rates on hold, but left the door open for more cuts to
support an economy reeling from a surge in coronavirus cases.
    The consensus of analysts had leant towards a cut at the
rate-setting meeting, although the Reserve Bank of India (RBI)
is wrestling with a spike in inflation above its target, thanks
to booming loan growth and a 10% drop in the value of the rupee.
    The RBI said it was watching for a "durable" reduction in
inflation that could give it a window to use available policy
space later if needed, and vowed to keep the policy stance
accommodative for "as long as necessary to revive growth".
    "Our view is that inflation will drop sharply over the
coming months as the collapse in demand more than offsets supply
constraints," said Shilan Shah, senior India economist at
Capital Economics, Singapore.
    "Indeed, the RBI has maintained its "accommodative" policy
stance today and Governor (Shaktikanta) Das stated that further
policy space is available. We are still forecasting a further 50
basis points of cuts before the end of the year."
    The rupee held its ground at around 74.850 against
the dollar, while stocks rose around 1%.
    Elsewhere in Asia, a robust performance overnight on Wall
Street helped most of the region's stock and currency markets
gain, with the Taiwan dollar leading the pack, up 0.6%.
    Manila led the gains in stocks as investors brushed
off data that showed the Philippines economy plunged by much
more than expected in the second quarter, slipping into
recession for the first time in three decades.
    "The market has widely priced in the double-digit
contraction in 2Q GDP as the PSI has been lagging versus its
peers," said Jennifer Lomboy, fund manager at First Metro Asset
    The index is down about 25% so far this year, making it
Asia's worst performer by a wide margin.
    The Indonesian rupiah was among the losers, falling
in the wake of data that showed its economy shrank for the first
time since 1999, prompting bets of further monetary easing. 
    Finance Minister Sri Mulyani Indrawati's comments that the
central bank and financial authorities would go "all out" to
boost growth though aggressive fiscal spending in the second
half helped stocks add almost 1%, but weighed on the rupiah.
    **  Investors stacked up bullish bets on most Asian
currencies, a fortnightly Reuters poll found.
    ** In the Philippines, top index gainers were Puregold Price
Club Inc up 4.17% and Manila Electric Co up
    ** Top gainers on the Singapore STI included
Yangzijiang Shipbuilding Holdings Ltd up 3.21% and
Jardine Strategic Holdings Ltd up 3.1% 
  Asia stock indexes and                                   
 currencies at   0741 GMT                             
                        DAILY  YTD %               S  S YTD
                            %                  DAILY      %
 Japan                  +0.00  +2.88           -0.43  -5.24
 China        <CNY=CFX  -0.15  +0.26            0.26  11.03
 India                  +0.09  -4.66            1.30  -7.58
 Indonesia              -0.41  -4.80            1.14  -17.6
 Malaysia               +0.10  -2.32            0.78  -0.53
 Philippines            +0.04  +3.26            1.18  -24.4
 S.Korea      <KRW=KFT  +0.45  -2.29            1.33   6.60
 Singapore              -0.01  -1.84            1.18  -20.4
 Taiwan                 +0.16  +2.20            0.87   7.64
 Thailand               -0.29  -3.80            0.53  -14.9
 (Reporting by Rashmi Ashok in Bengaluru; Editing by Patrick
Graham and Arun Koyyur)

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