EMERGING MARKETS-Asian stocks, currencies pressured by oil prices, bond rout

By Shruti Agarwal

Sept 24 (Reuters) - Emerging Asian stocks and currencies retreated on Thursday, with Indonesian assets leading the decline, weighed down by oil-driven inflation risks and sharply higher US Treasury yields.

MSCI's gauge of emerging Asia equities .MIMS00000PUS slipped 0.8%, with benchmarks in Indonesia .JSE and India .NSEI leading the decline, with drops of as much as 1.4% and 1.2%, respectively.

Oil prices climbed nearly 4% overnight after Iran's president vowed never to surrender in the face of US pressure, although they pared gains after Iran said it remained open to diplomacy. O/R

"Asian equities pulled back as Brent climbed back above US$100 a barrel," said Hugh Lam, investment strategist at Betashares, contrasting the fate of energy import-dependent Asian economies with tech-oriented markets like Japan’s Nikkei, which held up.

Stocks in Manila .PSI fell 1.1% to their lowest since November 2025, while those in Thailand .SETI were down 0.3%.

Taiwan's chip-heavy benchmark .TWII slipped 0.3%, ending a six-session winning streak. Semiconductor foundry giant TSMC 2330.TW retreated 1%, with analysts attributing the decline to profit taking after sharp gains.

South Korea's stock market was closed for the Chuseok holiday.

MSCI's index of emerging market currencies .MIEM00000CUS was trading down 0.3%, also weighed down by oil prices.

The Iran conflict has kept emerging market currencies under pressure as elevated oil prices fan inflation in energy-importing economies and strain their fiscal health.

The dollar clung to a two-month high, adding to pressure on regional currencies, after strong manufacturing data spurred fresh bets on a Federal Reserve rate increase and as a weak auction sent US Treasury yields higher. US/

Currencies of energy importing countries such as the Philippine peso, the Indian rupee and the Thai baht drifted between 0.1% to 0.2% lower.

The Indonesian rupiah led declines, weakening as much as 0.6% to 17,907 against the dollar, its lowest since early August.

Bank Indonesia's head of monetary management attributed the move to capital outflows caused by rising US yields, worries about the Middle East conflict and domestic US dollar purchases by importers.

Indonesia's parliament approved total government spending of 4,106.3 trillion rupiah ($231 billion) in its budget, 9.1 trillion rupiah higher than the initial amount proposed by President Prabowo Subianto in August.

The rupiah is the worst performing currency in the region this year, down around 6.8% as fuel subsidies have piled onto long-festering concerns about policymaking, fiscal spending, and central bank independence.

Investors are also monitoring a summit between US President Donald Trump and Chinese President Xi Jinping in Washington. While few expect major breakthroughs, markets will be watching closely for any extension of the countries' 11-month trade truce.

HIGHLIGHTS:

** Thailand targets $80 billion investments in semiconductors by 2050, investment board says

** Danantara Indonesia signs agreement with Thales for AI, defence, cybersecurity

** GCash owner Mynt secures over 20 cornerstone investors for potentially biggest Philippine IPO

** US says China trade truce extended as Trump welcomes Xi