EMERGING MARKETS-Indonesian stocks whiplash after finance minister ousted

By Pranav Kashyap and Twesha Dikshit

Sept 8 (Reuters) - Indonesian stocks flipped from early gains to finish lower, while the rupiah moved higher, after the country ousted Finance Minister Sri Mulyani Indrawati in a cabinet shake-up on Monday.

The rupiah IDR= jumped 0.7%, logging its biggest intraday gain in over two months, stocks .JKSE quickly reversed gains to close at an over one-week low, and international dollar bonds fell, with the 2045 bond traded down 0.33 cents to bid at 97.58 cents.

Her removal followed two weeks of nationwide unrest over tax fairness. Indonesia named Purbaya Yudhi Sadewa as the new finance minister, who said 8% growth was " not impossible " and would find ways to quickly boost the economy.

"There would definitely be concerns about how the fiscal situation would be in terms of fiscal policy developments out of Indonesia going forward," said Saktiandi Supaat, regional head Of FX Research and strategy, global markets, Maybank.

"In the interim, there will be some efforts by Bank Indonesia to make sure the currency remains stable."

Thailand's baht THB=, meanwhile, hit an over four-year high against the dollar, as political jitters eased following the election of its new prime minister on Friday, capping off months of political uncertainty.

The yield on the country's two-year TH2YT=RR bonds hit its lowest in over three years, while stocks in Bangkok .SETI were at their highest in nearly a month.

Malaysian equities finished 0.5% higher, while the ringgit MYR= inched up 0.1%.

Meanwhile, Istanbul stocks .XU100 fell 2% to a over one-month low, while the lira TRY= hovered near record lows and two- TR2YT=RR and five-year bond TR5YT=RR yields hit one-month highs.

Tensions spiked as the main opposition CHP urged rallies after police ringed its Istanbul headquarters with barricades—an action the party leader denounced as a "siege."

Renewed political uncertainty has sparked a fresh flight from Turkish assets since a court ordered the dismissal of CHP officials. The party has faced a months-long legal crackdown, including against Istanbul Mayor Ekrem Imamoglu—the president's chief rival—whose March arrest ignited Turkey’s largest street protests in a decade.

"If recent political uncertainties lead to a swift and sustained deterioration in appetite for lira and place significant pressure on reserves as we approach the monetary policy meeting, we believe they would be open to a smaller cut or even remaining on hold," said Yigit Onay, economist at Deutsche Bank.

The MSCI gauge for emerging market stocks .MSCIEF rose 0.5%, while a similar gauge for stocks .MIEM00000CUS ticked up 0.2%.

Vietnamese equities .VNI fell to a two-week low, after the World Bank trimmed its forecast for the country's economic growth on evidence that U.S. tariffs were starting to have an impact on the exporter's shipments.

Israel said it had accepted a Gaza ceasefire proposal from U.S. President Donald Trump, Israeli foreign minister Gideon Saar said. The Shekel ILS= rose 0.2%, to an over-one week high, while stocks in Tel Aviv .TA125 was down 0.4%.

In central and eastern Europe, most currencies were trading marginally lower against the euro, while equities were mixed.

Romanian equities .BETI fell 0.3% following the broad coalition government's advancement of deficit-lowering tax hike and spending cut packages after surviving four back-to-back no confidence votes.

The country currently has the highest budget deficit in the European Union that it must lower to avert a ratings downgrade from the last rung of investment grade.

Polish stocks .WIG20 jumped 1.4%, despite Fitch Ratings revising the country's outlook to "negative" from "stable", citing growing risks to public finances as the key driver.

Argentina's international bonds could open 5–6 points lower, investors said, after President Javier Milei’s party suffered a heavy defeat to Peronists in a weekend Buenos Aires province election. U.S.-listed Argentine shares also fell premarket.

EM currencies gained momentum as investors amped up bets on a Federal Reserve rate cut this month after fresh data signalled more cracks in the U.S. labour market.

Markets have fully priced a 25 bp move and now assign about a near 10% chance to a larger 50 bp cut—up from zero a week ago, CME FedWatch showed.

Elsewhere, South African stocks .JTOPI hit a two-week high, while the the rand ZAR= rose 0.2% ahead of the release of gross domestic product figures on Tuesday.

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