Indonesian rupiah, Malaysian ringgit gain among tepid Asian FX

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The Indonesian rupiah hovered near a two-month high on

Friday amid expectations the central bank will adopt an aggressive approach to

combat inflation, while the Malaysian ringgit firmed as robust economic growth

lifted market sentiment.

Among other regional currencies, the Singapore dollar and the Taiwan

dollar were flat.

The Indonesian rupiah scaled to its highest since June 13 to trade at

14,670 against the dollar. The currency has witnessed a recovery since June

lows, firming more than 1% so far this month as the economy remains on track for

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a recovery.

With inflation and the prospect of a global recession, which could draw money

away from riskier assets, there are expectations that Bank Indonesia (BI) could

raise its interest rate as it is one of the last countries in the region yet to

tighten their pandemic-era loose policy.

“Indonesia’s terms of trade have looked increasingly attractive over recent

months, offering support to its current account position and the rupiah,”

analysts from TD Securities said in a research note.

Analysts at Citi and OCBC are expecting the BI to raise its benchmark

seven-day reverse repurchase rate in a meeting later this month, with Citi

seeing a 25-basis-point hike. However, Maybank and ANZ do not see the central

bank rushing to tighten.

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The Malaysian ringgit saw a marginal rise despite strong data, as the

central bank flagged that slowdown in global growth is expected to pose a risk

to the country’s outlook for the rest of 2022.

Analysts from Barclays expect the Malaysian central bank to continue its

path of rate tightening amid growth optimism.

“While Bank Negara Malaysia (BNM) has already increased the policy rate by

50 bps in the current cycle, the resilience of the growth recovery could push

BNM to continue tightening,” Barclays analysts wrote.

Markets across the region were volatile, with stocks in Singapore,

Indonesia and China falling between 0.1% and 1%, while equities

in the Philippines and Malaysia were up 0.3% each.

Globally, investors remained on the back foot, as investors digested the

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need for a continuous boost in interest rates to temper down elevated price

pressures, despite a softer-than-expected CPI reading on Thursday.

Thai markets were shut on account of a public holiday.

HIGHLIGHTS:

** POLL – Thailand’s tourism-reliant economy likely gathered pace in Q2

** Indian shares on track for fourth weekly gain; inflation data in focus

** Indonesia’s benchmark 10-year bond yield down 6.953%

Asia stock indexes and currencies at

0711 GMT

COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS

DAILY % % DAILY YTD %

%

Japan -0.22 -13.66 2.62 -00.85

China +0.12 -5.67 -0.15 -9.98

India -0.04 -6.70 0.14 1.90

Indonesia +0.72 -2.80 -0.54 8.21

Malaysia -0.04 -6.32 0.31 -3.66

Philippines -0.40 -8.31 0.28 -5.94

S.Korea +0.05 -8.72 0.16 -15.10

Singapore +0.01 -1.50 -0.98 4.67

Taiwan -0.14 -7.65 0.60 -16.08

Thailand – -4.97 – -2.13

(Reporting by Archishma Iyer in Bengaluru; Editing by Sherry Jacob-Phillips)