* Regional FX, stocks edge lower
* Thai baht set for first weekly gain in four
* Fed Chair Powell's speech due later today

By Himanshi Akhand
       Aug 25 (Reuters) - Emerging Asian currencies declined on
Friday, with the Thai baht and the Indonesian rupiah weakening
the most, as the greenback strengthened ahead of a
widely-awaited speech by Federal Reserve Chair Jerome Powell on
the path of U.S. monetary policy.
    The rupiah eased 0.4%, a day after the country's
central bank left interest rates unchanged, as expected, while
drawing up plans to attract foreign portfolio investment inflows
that would help stabilise the currency. 
    Bank Indonesia (BI) plans to issue new rupiah-denominated
securities, using its holdings of government bonds as the
underlying asset, Governor Perry Warjiyo said.
    The rupiah is the best performing currency in the region,
but it has come under pressure along with Indonesian bonds due
to economic weakness in China and a widening yield gap with U.S.
Treasuries, which have resulted in Indonesia's external balances
deteriorating.
     Indonesia's current account swung into deficit for the
first time in two years in the second quarter due to falling
commodity prices and weak global growth, and the central bank
expects the deficit will be higher next year.
    And having posted a $6.5 billion balance of payments surplus
in the first quarter, Indonesia showed a $7.4 billion deficit in
the April-June quarter.
    "The new instrument is good to sustain short-term volatility
to contain potential external balance change for Indonesia. But
for the medium term, it will not solve the problem if the
balance of payment pressures escalate," said Fakhrul Fulvian, an
economist at Trimegah Securities.
    "What market really need most now is a steepening yield
curve," he said, adding that he sees volatility in rupiah for
the next two to three months.
    Indonesian 10-year benchmark yields were last down 1.5 basis
points at 6.558%.
    The baht weakened 0.5%, but was still set for its
first weekly gain in four weeks.
    After months of political uncertainty following a May
general election, the baht has drawn some support from the
formation of a new government by the Pheu Thai-led coalition,
and appointment of Srettha Thaivisin as prime minister.
    The baht's weakness on Friday was partly due to data showing
Thai exports shrank for a 10th consecutive month in July, and at
a far bigger rate than expected.
    Meanwhile, the U.S. dollar sat at an over two-month peak and
was on course for its sixth straight week of gains.
    Investors are closely waiting for Powell's address on
monetary policy at the Jackson Hole Economic Policy Symposium at
1405 GMT to better understand whether the Fed is done with rate
hikes and for how long it plans to keep rates elevated.
    A recent run of strong economic data has helped ease worries
of an impending recession in the U.S. but with inflation still
above the Fed's target, investors are wary that the U.S. central
bank is likely to keep interest rates higher for longer.
    The South Korean won declined 0.4%, a day after
the country's central bank held rates steady for a fifth
straight meeting.
    Malaysia's ringgit weakened 0.2% and was set for its
third consecutive weekly loss.    
    Data showed that Malaysia's consumer price index rose 2%
from a year earlier in July, the lowest inflation print in two
years.
    Equities in the region were also lower, with those in
Jakarta, Manila and Seoul falling between
0.4% and 0.8%.

            
  
HIGHLIGHTS
    ** Indonesia may reduce next year's bond sale target with
cash from 2023 
    ** Singapore July manufacturing output down 0.9% y/y, less
than expected
    ** Inflation in Japan's capital slows in August, stays above
BOJ target
    
  Asia stock indexes and currencies                       
 at 0513 GMT                                        
 COUNTRY   FX RIC          FX     FX  INDE  STOCKS  STOCKS
                      DAILY %  YTD %     X   DAILY   YTD %
                                                 %  
 Japan                  -0.12  -10.2  <.N2  -2.00   21.25
                                   2  25>           
 China                               EC>           
 India                  -0.14  +0.04  <.NS   -0.64    6.40
                                      EI>           
 Indonesi               -0.37  +1.75  <.JK   -0.35    0.36
 a                                    SE>           
 Malaysia               -0.15  -5.38  <.KL   -0.01   -3.41
                                      SE>           
 Philippi               +0.00  -1.80  <.PS   -0.68   -5.83
 nes                                  I>            
 S.Korea                             11>           
 Singapor               -0.01  -1.23  <.ST    0.03   -2.14
 e                                    I>            
 Taiwan                 -0.11  -3.52  <.TW   -1.39   16.98
                                      II>           
 Thailand               -0.47  -1.52  <.SE   -0.14   -6.80
                                      TI>           
 
            
        
  

    
 (Reporting by Himanshi Akhand in Bengaluru; Editing by Simon
Cameron-Moore)