EMERGING MARKETS-Indonesia stocks rise to one-week high; rupiah drifts past 18,000

By Sneha Kumar

Oct 22 (Reuters) - Indonesian equities rose to a one-week high on Thursday, while the rupiah drifted lower toward 18,050 a day after the central bank held rates and rolled out liquidity measures to support domestic growth.

The Jakarta Composite Index .JKSE opened lower but reversed course, climbing 1.6% and putting it on track for a third consecutive session of gains.

However, the benchmark remains about 8% below levels seen before MSCI warned it could move Indonesian equities to "standalone" market status.

"It looks more like a buy-the-dip opportunity than a meaningful shift in the market's fundamentals," said Gerald Gan, chief investment officer at Reed Capital Partners, citing lingering concerns around financial regulations and the transboundary haze linked to fires in Indonesia.

"Until there is greater clarity on these issues, I would view the rebound as tactical rather than the start of a sustained re-rating."

Sovereign wealth fund Danantara Indonesia has been buying shares in companies it considers attractive, its chief investment officer said, after a record two-day trading rout earlier this week.

Bank Indonesia kept its benchmark policy rate unchanged on Wednesday, though it hiked its overnight deposit rate and cut reserve requirements in an effort to curb market volatility and support job creation.

The rupiah depreciated nearly 0.5% over the past two days, last seen at 18,045 against the dollar. The currency has lost about 8% this year, its worst performance since 2022.

MSCI's emerging Asia equities index .MIMS00000PUS fell 1.5% to its lowest level in nearly three months, weighed down by a 2.8% drop in South Korea's KOSPI .KS11 and a 1.2% decline in Taiwan's benchmark index .TWII.

Reed Capital's Gan pinned the moves in Asia on a broader risk-off shift, citing oil prices, renewed Middle East geopolitical uncertainty and growing caution around the AI trade, despite relatively positive earnings catalysts.

Profit-taking in chip stocks pressured South Korean equities. Investors also focused on the Bank of Korea, which left its benchmark rate unchanged as expected while maintaining a hawkish stance.

The South Korean won has gained nearly 15% in the second half of the year so far.

The Philippine peso depreciated further, lingering near an all-time low of 63.438 a dollar ahead of the Bangko Sentral ng Pilipinas' policy meeting later in the day.

A Reuters poll showed analysts expect the Bangko Sentral ng Pilipinas to raise interest rates to 5.25%, following three consecutive hikes totalling 75 basis points.

Inflation remains a sore point for the central bank, with the September print having accelerated to 7.2%, far above its target range of 2% to 4%.

Shares in Manila .PSI slipped 1.2% after adding more than 3.5% over the previous five sessions, while stocks in Thailand .SETI and Malaysia .KLSE were up about 0.2% each.

HIGHLIGHTS:

** Indonesia's 10-year bond yield at 7.446%

** DeepSeek wrapping up $15 billion fundraising to fuel AI race

** China's yuan climbs to fresh 4-year high, global central bank meetings in focus