EMERGING MARKETS-Indonesian rupiah trims losses after surprise rate hike; Asian FX, equities decline

* Bank Indonesia raises rates by 25bps * Malaysia's ringgit hits lowest since 1998 * S.Korea, Singapore stocks fall most among regional equities By Himanshi Akhand Oct 19 (Reuters) - Indonesia's rupiah pared losses after the central bank unexpectedly raised interest rates on Thursday, while Malaysia's ringgit fell to a 25-year low, as U.S. Treasury yields surged on rising bets of higher-for-longer interest rates. The rupiah was last down 0.5%, after falling as much as 0.8% to its lowest since April 2020 earlier in the session. Bank Indonesia surprised markets by hiking the benchmark 7-day reverse repurchase rate by 25 basis points to 6.00%, its second hike this year, with an intention to strengthen the rupiah's stability amid global uncertainty. Governor Perry Warjiyo said the hike was a pre-emptive and forward-looking measure to mitigate the risk of imported inflation. "It shows that they are aware of the situation and have expectations for IDR depreciation to be toned down," said Fakhrul Fulvian, an economist at Trimegah Securities. "However, development of prospective worsening current account balance will determine many things going ahead." Meanwhile, a sell-off in the U.S. bond market continued into Asian hours with the yield on 10-year notes touching a 16-year high as investors assessed the Federal Reserve's expected higher-for-longer interest rate stance, ahead of Chair Jerome Powell's speech. The South Korean won weakened 0.6% even as the Bank of Korea kept its interest rate unchanged for a sixth straight meeting. Malaysia's ringgit weakened as much as 0.5% to its lowest level since 1998. "We are not surprised by the MYR's weakness – its offshore implied yield is the lowest in Asia...and its basic balance of payments had already sunk into a deficit in 1H23, amid resident outflows," Joey Chew, head of Asia FX research at HSBC, wrote in a note. Risk sentiment also deteriorated due to mounting geopolitical tension in the Middle East. Oil prices climbed about 2% to a two-week high overnight on concern about global supplies after Iran called for an oil embargo on Israel. Prices reversed gains on Thursday after OPEC showed no sign of supporting Iran's call. "Going forward, if the situation deteriorates, we think the differentiating factors for Asian FX will widen to include oil price sensitivity," HSBC's Chew said. The negative sentiment from Wall Street indices ending sharply lower overnight spilled over into Asian equities with stocks in Shanghai, Seoul and Singapore falling between 1.2% and 1.9%. HIGHLIGHTS ** Japanese government bond yields hit new decade highs amid U.S. rate worries ** Indonesian ex-governor registers for presidential race as election season begins ** Bondholders of China's Country Garden seek talks after missed payment -sources Asia stock indexes and currencies at 0840 GMT COUNTRY FX RIC FX FX INDE STOCKS STOCKS DAILY % YTD % X DAILY YTD % % Japan +0.09 -12.4 <.N2 -1.91 20.45 7 25> China EC> India -0.02 -0.66 <.NS -0.14 8.49 EI> Indonesi -0.54 -1.55 <.JK -0.80 0.32 a SE> Malaysia -0.44 -7.62 <.KL -0.29 -3.55 SE> Philippi -0.12 -2.02 <.PS -0.78 -5.29 nes I> S.Korea 11> Singapor -0.05 -2.48 <.ST -1.16 -4.65 e I> Taiwan -0.11 -5.00 <.TW 0.07 16.37 II> Thailand -0.29 -5.17 <.SE -0.96 -14.66 TI> (Reporting by Himanshi Akhand in Bengaluru; editing by Eileen Soreng)