Exports data boosts S. Korea, Taiwan shares; Rupiah firms before rate review

South Korean and Taiwanese shares jumped on Thursday as upbeat export data from both countries lifted investor sentiment, while the Indonesian rupiah inched higher ahead of a central bank meeting where rates are expected to be kept on hold.

Data showed South Korea's exports expanded at a much faster pace in the first 20 days of January, and Taiwan's export orders hit a record high in 2020 boosted by strong demand for technology products.

Shares in Seoul climbed 0.7% and were headed for a third consecutive day of gains, while the Taiwanese market surged nearly 2% and its currency once again stood out with a gain of more than 1%.

"Growth is picking up in Asia, especially those benefiting from tech exports but generally as we see vaccine rollouts being expedited, that would support expectations of recovery and mean there is scope for Asian currencies to strengthen," said Sim Moh Siong, FX strategist at Bank of Singapore.

"There is nagging concern about the rise in US bond yields, but it is going to be orderly and won't be a hurdle for further strengthening of Asian currencies."

Currencies across the region notched modest gains as bets of a bigger pandemic relief plan in the US under a Joe Biden administration sapped demand for the safe-haven dollar and drove buyers into riskier assets.

The Malaysian ringgit and Thai baht strengthened 0.3% and 0.2% each, while the South Korean won and Singapore dollar traded marginally higher.

In Indonesia, investors were looking ahead to an interest rate decision by the central bank later in the day. The rupiah ticked up 0.2%, and shares barely moved before the policy meeting.

Most analysts in a Reuters poll expect Bank Indonesia to keep its main policy rate unchanged at 3.75%, which could help the currency maintain a comfortable yield advantage against the US dollar, after a rise in US Treasury yields earlier this month pressured the rupiah.

"Recent rupiah volatility and bounce in UST yields reflecting reflation trades are a bother for policymakers, inhibiting the central bank from easing rates further at this juncture," analysts at DBS Bank wrote in a note.

"We, nonetheless, see room for a cut within 1H21 if the (coronavirus) infection curve fails to stabilise, with real rates providing a sufficient cushion."

Shares in Thailand were up 0.8%, while Philippine equities once again underperformed, with the benchmark index on course for a fifth day of losses.