Home Business Indonesian rupiah rallies on weak dollar; Asia stocks range-bound

Indonesian rupiah rallies on weak dollar; Asia stocks range-bound

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Indonesia’s rupiah firmed to a

four-month high on Tuesday amid tepid gains in other emerging

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Asian currencies against a weaker U.S. dollar, with trading in

the region largely subdued due to the Lunar New Year holiday.

The rupiah strengthened as much as 1.1% against the

dollar to hit its highest level since Sept. 15, and was headed

to test 14,975 to 15,000 per dollar.

“USD/IDR broke below the 15,000 handle which is a

psychological support level, and also close to the 200-day

moving average at 15,075,” TD Securities global strategist Alex

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Loo said.

“Real policy rates have now turned positive, a factor that

will also likely help to support the IDR rally.”

Last week, Indonesia’s central bank raised its key policy

rate by 25 basis points (bps) and signaled its tightening cycle

was ending as inflation cooled faster than expected in the

largest Southeast Asian economy.

Aiding gains in holiday-thinned trading, the dollar index

struggled as traders continued to gauge the risks of a

U.S. recession and the path for the Federal Reserve policy.

The Japanese yen rose 0.4%, while Nikkei index

gained 1.46% to close at its highest close since Dec.

16.

The Philippine peso gained 0.3%, with the country’s

central bank governor anticipating annual inflation to ease to

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below 4% by the third quarter, as aggressive tightening and

supply-side intervention take root.

The Indian rupee declined 0.3%, while Thailand’s

baht slipped 0.2%.

The Thai central bank is expected to raise interest rates by

25 bps on Wednesday to curb elevated inflation, according to a

Reuters poll. Its equities were up 0.2%.

More central banks in Asia dialed back their policy

tightening narrative last week, with the Malaysian central bank

unexpectedly pausing and Indonesia signaling an early end to

its cycle.

China kept benchmark lending rates unchanged for a fifth

straight month on Friday, as expected, but analysts say future

cuts are possible, because the central bank has pledged to

support the COVID-ravaged economy.

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Most Asian markets remained close for Lunar New Year

celebrations including mainland China, Singapore, South Korea

and Malaysia.

“Markets are probably more quiet as people are more

cautious, given the looming Fed FOMC meeting. Fed officials have

officially entered in a communication blackout,” Loo added.

Still, risk sentiment was buoyed by an overnight rally in

U.S. tech stocks and by broader optimism over China’s recovery

following the abrupt end of its zero-COVID policy.

Shares rose 0.3% in the Philippines, while those in

India were flat. Indonesia stocks lost 0.3%.

HIGHLIGHTS:

** Indonesia’s 10-year Treasury yield touched

its lowest since March 4

** Thailand received 11.15 million foreign visitors in 2022,

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a surge from just about 428,000 the previous year when broad

pandemic-related travel curbs were in place, tourism ministry

data showed on Tuesday

** Investors await U.S. flash PMI data on Tuesday, Fed seen

raising rates by 25 basis points on Feb. 1

Asia stock indexes and

currencies at 0651 GMT

COUNTRY FX RIC FX FX INDEX STOCKS STOCKS

DAILY YTD % DAILY YTD %

% %

Japan +0.44 +0.78 1.46 4.62

China

India -0.20 +1.43 -0.01 0.06

Indones +0.97 +4.29 -0.18 0.17

ia

Malaysi – +2.73 – 0.32

a

Philipp +0.28 +2.33 0.28 7.96

ines

S.Korea

Singapo +0.05 +1.66 – 1.30

re

Taiwan – +1.12 – 5.62

Thailan -0.12 +5.59 0.28 1.20

d

(Reporting by Savyata Mishra in Bengaluru; Editing by Bradley

Perrett and Rashmi Aich)

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