Taiwan leads Asian rally as AI optimism lifts sentiment; Thai baht weakens

• MSCI Asia equities index rises 0.3%
• BSP to stand pat on rates - Reuters poll
• Peso flat, stocks inch higher ahead of BSP call

By Rishav Chatterjee

Oct 9 (Reuters) - Taiwan stocks scaled another fresh record on Thursday, spearheading gains across Asia as markets regained momentum on renewed optimism around AI-driven headlines, while Philippine equities edged up ahead of a closely-contested rate decision.

The MSCI index of emerging Asian equities .MIMS00000PUS, which had slipped more than 1% in the previous session, rose 0.3%, while the broader MSCI Asia-Pacific ex-Japan index .MIAPJ0000PUS also nudged higher.

Overnight, Wall Street notched fresh peaks as a renewed rally in AI-linked tech stocks overshadowed concerns over a prolonged U.S. government shutdown and the absence of major economic data.

In Taipei .TWII, the benchmark climbed as much as 1.5%, marking its fourth record in five sessions amid a feverish AI-driven run.

Shares in Indonesia .JKSE and Malaysia .KLSE advanced 0.6% and 0.2%, respectively, while Thailand’s .SETI benchmark jumped 0.7%. Singapore’s .STI index, however, eased slightly.

The Monetary Authority of Singapore is set to meet on October 14, with analysts at OCBC predicting it to be a close call between flattening the slope and staying on hold.

Elsewhere, Manila’s benchmark .PSI traded without a clear direction as investors awaited the Bangko Sentral ng Pilipinas’ rate call.

Fourteen of 23 economists polled by Reuters expect the central bank to keep its policy rate steady at 5%, as the country battles elevated inflation and political unrest over an infrastructure-corruption probe. The peso PHP= was flat.

Weak growth in Philippines, worsened by the infrastructure corruption scandal, argues for further easing, but the same scandal has rattled the peso, making rate cuts risky for currency stability, said Vishnu Varathan, managing director, head of macro research, Asia ex-Japan at Mizuho Securities.

In effect, the scandal has deepened both growth and FX pressures, sharpening the policy trade-off, he added.

In currency markets, the Thai baht THB=TH weakened to its lowest since late August, last trading at 32.48 per U.S. dollar, after the Bank of Thailand surprised markets on Wednesday by holding rates unchanged but signalling readiness to ease if growth falters further.

Analysts still expect two rate cuts by year-end.

Other currencies in emerging Asia eked out modest gains against a steady U.S. dollar on Thursday. The Singapore dollar SGD= and its Taiwanese counterpart TWD=TP gained 0.1% and 0.2%, respectively, while the Indonesian rupiah IDR= added 0.2%.

The Malaysian ringgit MYR= traded flat.

Asian ex-Japan currencies are likely to continue range-bound, two-way trading in the absence of major data catalysts, with moves guided by overall equity market sentiment, said Christopher Wong, currency strategist with OCBC.

Attention remains on the duration of the U.S. government shutdown, as a prolonged impasse could start to weigh on economic activity, Wong said.