By Shruti Agarwal
Sept 25 (Reuters) – Indonesia’s rupiah was headed on Friday for its biggest weekly decline since May, pressured by rising US Treasury yields, a stronger dollar and expectations that the Fed will keep rates higher for longer, while other regional currencies traded mixed.
The rupiah extended losses, weakening as much as 0.3% to 17,935 per dollar, putting it on course for its worst weekly performance since mid-May, having depreciated more than 1% so far.
Bank Indonesia on Wednesday kept its benchmark interest rate unchanged at 5.75%, after raising it by a cumulative 100 basis points between May and June to support the weakening rupiah.
It signalled it would rather support the rupiah through market-based measures as elevated oil prices and higher US yields pressure the currency.
Lloyd Chan, FX strategist at MUFG, said in a note that BI and the finance ministry were coordinating next year’s financing plans to help ease pressure on the domestic bond market, though such coordination would offer limited protection against a prolonged external shock.
Further deterioration in the external backdrop could leave more of the adjustment burden on the rupiah and increase pressure on the central bank to keep monetary policy tight, he said.
The rupiah has been the worst-performing currency among oil-importing emerging Asian economies this year, falling 7% against the dollar, as fuel subsidies aimed at shielding consumers from soaring crude prices have intensified concerns over the fiscal health of the $1.4 trillion economy.
Other Asian currencies were largely mixed on Friday, with the broader tone remaining cautious as 30-year US bond yields hit their highest since 2004 and a stronger dollar continued to weigh on regional foreign exchange markets. [US/]
The Thai baht weakened further to 33.455, while the Indian rupee edged higher on expectations of intervention by the Reserve Bank of India.
The Malaysian ringgit strengthened 0.2%, while the South Korean won and Taiwan’s dollar gained 0.5% and 0.2%, respectively, though trading volumes were thin, with both markets on a holiday.
Regional equity markets ticked higher, with China, South Korea and Taiwan closed for holidays.
Stocks in Thailand and the Philippines rebounded from the previous session’s losses, rising 0.5% and 0.7%, respectively, while equities in Jakarta fell 0.6%.
South Korea’s KOSPI climbed 2.7% this week, while Taiwanese stocks rose 1.8% in their second straight weekly gain on renewed optimism about chip demand.
Investors monitored a summit between US President Donald Trump and Chinese President Xi Jinping in Washington amid no signs of breakthroughs on thorny issues such as AI, trade and Taiwan.
HIGHLIGHTS:
** Indonesia government commits to cooperative loan repayments as deadline looms
** Thai August exports rise 24.3% on-year, close to forecast
** Thailand’s SET, NYSE strike deal to explore dual listings and new products
** Japan says Trump voiced concern over weak yen in summit with PM Takaichi
Asia stock indexes and currencies at 0515 GMT
COUNTRY FX RIC FX DAILY FX YTD % INDEX STOCKS STOCKS
% DAILY YTD %
%
Japan +0.45 -0.93 1.29 28.02
China – +4.10 – -2.03
India +0.06 -6.29 0.09 -11.66
Indonesi -0.22 -7.00 -0.55 -27.56
a
Malaysia +0.22 -0.47 -0.07 -0.53
Philippi +0.31 -5.93 0.61 -4.76
nes
S.Korea +0.42 +5.81 – 68.03
Singapor +0.01 +0.52 0.11 22.46
e
Taiwan – -1.08 – 65.81
Thailand -0.16 -6.04 0.49 27.85
(Reporting by Shruti Agarwal in Bengaluru; Editing by Subhranshu Sahu)
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