By Sameer Manekar

Sept 9 (Reuters) - Indonesia's rupiah sank the most in five months while its stocks plunged more than 1% on Tuesday, after an abrupt ouster of its influential finance chief sparked fears that populist spending plans could erode the country's hard-fought fiscal discipline.

The rupiah weakened 1.2% to 16,495 per U.S. dollar, marking its worst one-day plunge since the early-April sell-off triggered by the so-called "Liberation Day" tariffs. The sharp decline prompted Bank Indonesia to intervene to stabilise the currency.

Sri Mulyani Indrawati, one of Indonesia's longest-serving finance ministers, was instrumental in improving the country's fiscal performance, reforming the taxation system, and is also viewed by investors as a cornerstone of confidence in Southeast Asia's largest economy.

Her unexpected departure, which comes amid widespread protests and unrest, has rattled global investors who fear populist spending plans under President Prabowo Subianto could deplete Indonesia's hard-won fiscal credibility.

"Sri Indrawati Mulyani's departure poses significant damage to the Indonesian fiscal position and to global investors in the near term," said Ryota Abe, an economist at SMBC in Singapore.

The Jakarta composite index .JKSE fell 1.7% to its weakest point since September 1, though it recouped some of its early losses to trade 1.3% lower, as of 0407 GMT. Yields on its 10-year bonds ID10YT=RR rose sharply to 6.489%, highest since early August.

Jason De Vito, a lead portfolio manager for emerging market debt at Federated Hermes, said "a move to more aggressive deficits may be of concern to investors" given Indonesia has long been "very fiscally disciplined and heralded for it".

However, he also noted a contrarian view that "strict fiscal posturing has arguably limited the growth upside and greater spending may spur the creation of better-paying middle-class level jobs".

Equities in emerging Asian markets elsewhere were propped by rising bets of an interest rate cut by the Federal Reserve next week.

Taiwan's benchmark index .TWII touched an all-time high for the second consecutive session. South Korea's KOSPI index .KS11 jumped 1.2% to mark its sixth consecutive day of gains, led by Samsung Electronics 005930.KS and SK Hynix 000660.KS.

The MSCI gauge of EM Asia equities .MIMS00000PUS jumped more than 1% to its highest point in four years, led by stocks in Taiwan and South Korea, which account for 37% of the regional index.

Thailand's benchmark stock index .SETI rose 0.6%, marking its third consecutive session of gains, while the baht THB=TH edged up to a fresh four-year high.

Investors welcomed the election of Anutin Charnvirakul, a political veteran, as Thailand's new prime minister after months of uncertainty, but caution prevails over key political pledges, including a constitutional amendment and parliament's dissolution in four months.

Malaysian stocks .KLSE slipped marginally, while the ringgit MYR= edged higher. India's rupee INR=IN appreciated 0.3% while its stocks .NSEI also edged higher. Equities in Vietnam .VNI slipped 0.6% to a two-week low.

Singapore's FTSE Straits Times .STI slipped 0.3% from a record-high scaled the previous day, led lower by heavyweight banks.

In Argentina, stocks .MERV plunged more than 10% while the peso ARS=RASL hit a record low on Monday after President Javier Milei's party suffered a crushing defeat in the Buenos Aires province.

HIGHLIGHTS:

** India's 10-year bond yields IN10YT=RR slip to 6.452%, their lowest since Aug 18

** Thai court orders Thaksin Shinawatra must serve one year in jail

** Indonesia's Bank Central Asia BBCA.JK falls 3%, marks worst single-day drop since April 8

(Reporting by Sameer Manekar in Bengaluru; Editing by Sherry Jacob-Phillips)

((Sameer.Manekar@thomsonreuters.com;))