Indonesia rupiah hovers around 2-year low as c.bank holds rates

Article content

The Indonesia rupiah hovered around a

two-year low on Thursday after the country’s central bank held

its key lending rate steady as expected, while the Thai baht hit

a more than 15-year trough in an overall subdued Asian currency

market.

The rupiah hit its lowest level since May 2020 and

was last down 0.3%, after Bank Indonesia (BI) left its key

lending rate unchanged, but flagged an acceleration in monetary

policy normalization to counter inflationary pressures.

BI maintained that inflation will return to its 2%-4% target

Article content

range in 2023 after likely overshooting this year.

“Even though the rupiah did not depreciate as much as its

peers, the central bank’s decision could start putting pressure

on the currency in the coming months,” said Fakhrul Fulvian, an

economist at Trimegah Securities, adding that a rate hike could

be on the table at their August meeting.

Stocks in Jakarta also slipped 0.5%.

The baht fell over 0.5% to hit its lowest level

since December 2006. Maybank analysts said COVID-19 flare-ups in

China and the perceptions of lagging policy normalization in

Thailand versus its peers were weighing on the currency.

“EM currencies are now experiencing pressure as flows are

likely to be limited going ahead. And with lower global slowdown

Article content

in growth, there are increasing chances of recession in some

countries,” Fakhrul said.

Most stocks in the region rose tracking an overnight Wall

Street rally after Tesla posted better-than-expected

results after the bell, easing investors’ concerns about slowing

economic growth.

Stocks in South Korea and Malaysia rose

0.9% each to lead gains in the region. Stocks in India

edged higher, too. The Philippine’ stocks bucked the

trend to fall 0.3%

Also providing some relief to markets was the highly awaited

resumption of Russia’s gas supply to Germany via the Nord Stream

1 pipeline, thereby addressing Europe’s supply concerns amid an

economic tit-for-tat with the Kremlin over its invasion of

Ukraine.

Investors kept a wary eye on the situation in China where a

Article content

resurgence in COVID-19 cases and a slump in the property market

amid growing calls for mortgage boycotts could hurt risk

sentiment.

“While we think that the virus is an important growth

indicator for the coming quarters, the homebuyers refusal to pay

mortgages on unfinished properties exposes unresolved issues of

the property sector,” analysts at Goldamn Sachs said in a note.

“It is critical for policymakers to restore confidence in

the market quickly to avoid a potential negative feedback loop

and renewed deterioration in the property market, which is

seeing a very fragile recovery.”

HIGHLIGHTS:

** Indonesian 10-year benchmark yields unchanged at 7.503%

after Bank Indonesia held key lending rate at a record low

Article content

** Bank Of Japan retains easy policy, Kuroda shuns chance of

near-term rate hike

** Asia’s central banks forced to play catch-up in global

rush to raise rates

Asia stock indexes and currencies at 0807 GMT

COUNTRY FX FX FX INDEX STOCKS STOCKS

RIC YTD DAILY YTD %

DAILY % %

%

Japan -0.29 -16.97 0.44 -3.43

China -0.14 -6.08 -0.99 -10.10

India +0.03 -7.05 0.18 -4.63

Indonesia -0.30 -5.19 -0.53 3.90

Malaysia -0.09 -6.51 0.91 -7.50

Philippin -0.12 -9.48 -0.30 -12.16

es

S.Korea +0.40 -9.09 0.93 -19.09

Singapore -0.11 -3.27 -0.48 0.99

Taiwan +0.02 -7.36 1.39 -18.01

Thailand -0.54 -9.45 0.13 -7.02

(Reporting by Tejaswi Marthi in Bengaluru; Editing by Rashmi

Aich)