* Graphic: Foreign flows into Asian stocks tmsnrt.rs/3f2vwbA * Indonesia's central bank cuts interest rates by 25 bps, as expected * BI says further easing possible but will keep rupiah stability in mind * Second-wave fears continue to rattle markets By Nikhil Nainan June 18 (Reuters) - Indonesia's rupiah gained on Thursday after the central bank cut interest rates as widely expected, signalling it may ease further but would keep the currency's stability in mind. Bank Indonesia (BI) cut rates by 25 basis points for the third time this year, stopping short of a more aggressive move that might have weakened the currency. It signalled it may still ease further but would prioritise the currency's stability. The rupiah strengthened as much 0.4% against the dollar after the decision, having trailed broader gains in other Asian currencies earlier in the day. "Unlike in May, BI now seems more confident of not spooking the rupiah market with a rate cut," said Julian Wee, an investment strategist at Credit Suisse in Singapore. Equity markets, however, fell 1.3% as the central bank trimmed its outlook for 2020 GDP growth to 0.9%-1.9% from 2.3%. Southeast Asia's largest economy is facing its first contraction since 1999 in the second quarter due to restrictions imposed to control the spread of the coronavirus. The central bank governor said growth would bottom in the second quarter and then recover. "Portfolio inflows will remain contingent on growth prospects not deteriorating sharply," Wee added. "That in turn hinges on how well the virus outbreak is contained, which is beyond BI's control." Away from Indonesia, Asia's foreign exchange markets advanced against the greenback, with the yuan and South Korea's won the best performers. Policymakers in China vowed to keep supporting financial markets and the economy as the country recovers from the coronavirus outbreak earlier this year. However, worries over a fresh wave of coronavirus infections, as seen in the United States and China, weighed on broader Asian markets as some fear countries may have to backtrack or slow the reopening of their economies after months of lockdown. "Now that the reopening trade is well priced in, markets have to deal with the trickier issue of evaluating what the economic recovery will look like beyond the next couple of months," said Paul O’Connor, head of multi-asset at Janus Henderson Investors. Asia stock indexes and currencies at 0946 GMT COUNTRY FX FX FX INDEX STOCKS STOCKS RIC DAILY % YTD % DAILY % YTD % Japan +0.03 +1.53 -0.45 -5.50 China +0.04 -1.66 0.12 -3.63 India +0.01 -6.25 2.23 -16.99 Indonesia +0.11 -0.93 -1.25 -21.82 Malaysia +0.14 -4.28 -1.40 -5.28 Philippines -0.09 +1.07 1.06 -18.77 S.Korea +0.49 -4.27 -0.35 -2.92 Singapore +0.10 -3.38 -0.15 -17.29 Taiwan +0.09 +1.52 0.12 -3.74 Thailand +0.42 -3.76 -0.23 -13.09 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Subhranshu Sahu)
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