* Graphic: World FX rates tmsnrt.rs/2egbfVh * Graphic: Foreign flows into Asian stocks tmsnrt.rs/3f2vwbA * Economists divided on RBI decision, lean towards rate cut * RBI decision, comments on moratorium expected around 0630 GMT * Thai baht weak after BOT warns against baht strength * Philippine economy dives into recession in Q2 By Rashmi Ashok Aug 6 (Reuters) - The Indian rupee firmed and stocks climbed on Thursday in the run up to the Reserve Bank of India's policy decision, expected to be a close call, with economists leaning slightly towards a rate cut. The RBI is seen cutting rates by 25 basis points to help boost growth despite inflationary pressures, as coronavirus cases continue unabated and businesses struggle to recover from large-scale lockdowns. A decision on a moratorium on loan repayments, currently set to expire by end-August, is also expected. "With contention over loan moratoriums, and move to help with debt restructuring, softer interest rates may be desired. - especially insofar that public debt burdens are also set to mount significantly," analysts at Mizuho wrote. Debt financing is a big concern, given that India's federal fiscal deficit touched a record $88.5 billion in the second quarter, 83.2% of the target for the whole current fiscal year, due to coronavirus-led spending. Mizuho leans towards a 25 basis point cut, expecting the RBI to strike a judicious balance between preventing a solvency crisis for businesses hit by cash-flow shock or P&L damage and an adverse impact on local banks' balance sheets. "A weaker USD backdrop may help quell worries of rupee wobbles, if rate cuts are deemed to have gone too far," they added. The RBI's decision is expected around 0630 GMT. The dollar continued its decline after weak U.S. jobs data overnight, helping most Asian currencies notch firm gains, led by the Taiwan dollar. The Indonesian rupiah struggled after Wednesday's data showed its economy shrank for the first time since 1999 in the second quarter, which prompted bets of more rate cuts. Later into the day, Finance Minister Sri Mulyani Indrawati said the central bank and financial authorities would go "all out" to support growth, vowing to boost fiscal spending in the second half to avoid another contraction. This stepped up pressure on the rupiah, which tumbled last month after Bank Indonesia agreed to help the government fund a huge fiscal deficit by buying bonds without receiving interest, a move many analysts say carries inflationary risks. Thailand's baht edged lower after its central bank on Wednesday voiced concern that currency strength could affect economic recovery, and warned it would take the "necessary steps" to deal with it. Philippine stocks edged lower after data showed the country's economy plunged by much more than expected in the second quarter, falling into recession for the first time in 29 years. HIGHLIGHTS ** Indonesian 10-year benchmark yields fell 2.9 basis points to 6.803% while 3-year benchmark yields eased 0.2 basis points to 5.316% ** In the Philippines, top index gainers were Puregold Price Club Inc up 4.27% and Security Bank Corp up 3.45% ** Top gainers on Thailand's SETI included Thai-German Products up 16.67% and Sriracha Construction adding 14.88% Asia stock indexes and currencies at 0432 GMT COUNTRY FX RIC FX FX INDEX STOCK STOCK DAILY YTD % S S YTD % DAILY % % Japan +0.06 +2.94 -0.39 -5.19 China <CNY=CFX -0.13 +0.28 -0.38 10.32 S> India +0.17 -4.58 0.58 -8.24 Indonesia -0.48 -4.87 0.85 -17.9 2 Malaysia +0.10 -2.32 0.53 -0.78 Philippines +0.06 +3.28 -0.09 -25.4 2 S.Korea <KRW=KFT +0.33 -2.41 0.96 6.21 C> Singapore +0.01 -1.82 0.90 -20.7 1 Taiwan +0.52 +2.57 0.76 7.52 Thailand -0.23 -3.73 0.14 -15.2 3 (Reporting by Rashmi Ashok in Bengaluru; editing by Richard Pullin)
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