By Jongwoo Cheon
SINGAPORE (Reuters) - The rupee and the Indonesian rupiah led gains among emerging Asian currencies on Friday on hopes that opposition parties will win elections, though profit-taking sent most other regional currencies lower on the week.
The rupee hit a near 10-month high as an alliance led by pro-reform and business friendly Hindu nationalist Narendra was on course for an absolute majority.
The rupiah touched a five-week peak on capital inflows amid expectations that the hugely popular Jakarta governor Joko "Jokowi" Widodo would win the presidential election on July 9.
Their appreciation came as U.S. Treasury yields slid, prompting investors to seek higher returns.
"With political uncertainty cleared, the rupee's outlook is getting brighter. It will also benefit from more carry trades," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
"Lower U.S. yields, as well as easing bias of the ECB, will boost fund inflows to emerging Asia. We may see money moving from southern Europe to Asia too," Park added.
The European Central Bank is preparing a package of policy options for its June meeting, including cuts in all interest rates and targeted measures for small companies.
The Indian currency has risen 2.2 percent so far this week, which would be the largest weekly gain since September last year, Thomson Reuters data showed.
The rupiah has gained 1.1 percent as Jokowi earlier this week secured the support of Indonesia's second-largest political party, taking a step closer to the presidential palace.
Most other regional units eased for the week on profit-taking and as foreign exchange authorities of some countries such as South Korea were spotted intervening to stem their currency gains.
The won eased 0.1 percent.
The Philippine peso weakened 0.2 percent as investors booked profits after the currency last week scored its largest weekly gain in nearly two years.
Singapore's dollar slid 0.2 percent, while the Malaysian ringgit dipped 0.1 percent.
RUPIAH
The rupiah rose as much as 0.4 percent to 11,397 per dollar, its strongest since April 11, as most Indonesian government bond yields slid and Jakarta shares gained 0.4 percent.
Some traders booked profits as the currency also has a chart resistance at 11,405, the 61.8 percent Fibonacci retracement of its depreciation in April. Investors were keeping an eye on who will be Jokowi's running mate.
Once the resistance is cleared, the rupiah may head to 11,346, the 76.4 percent retracement.
The Indonesian currency is expected to stay firm, given sustained hopes of Jokowi's victory and lower U.S. Treasury yields, traders said.
"The rupiah can strengthen if Jokowi teams up with Jusuf Kalla," said a Jakarta-based trader, referring to a former vice president who is an influential public figure and heads the Indonesian Red Cross.
The rupiah may strengthen to 11,300, the trader said.
PHILIPPINE PESO
The peso eased for a second consecutive session as investors continued to take profits.
Manila stocks shed 0.9 percent, well underperforming most Southeast Asian stocks.
Still, five- and 10-year government bond yields fell, limiting the peso's slides.
(Editing by Kim Coghill)
