Indonesian rupiah gains, stocks drop as GDP fuels rate hike view
Indonesia’s rupiah gained for a second
straight session on Tuesday, a day after the country reported
its fastest pace of growth in more than a year, while stocks
lagged broader Asia on the prospect of more interest rate hikes
by its central bank.
Southeast Asia’s largest economy, which reported
third-quarter growth figures on Monday, has seen its currency
gain 0.4% since then. The rupiah is still down nearly 10%
against the U.S. dollar this year.
“The growth outlook is a bit more cloudy, but I think in
Indonesia the economy can hold up relatively well and that’s
because Indonesia is much more dependent on domestic demand than
on external demand,” said Alvin Tan, head of Asia FX strategy at
RBC Capital Markets.
Jakarta’s main stock index dipped 0.4% after three
days of gains as analysts predicted strong growth may embolden
Bank Indonesia (BI) to raise rates aggressively as it follows
other global central banks in trying to curb surging inflation.
Kunal Kundu, an analyst at Societe Generale, predicted a
“perfect storm” for Indonesia next year as commodity prices
drop, the government reverts to the budget deficit’s legal limit
of 3% of GDP, and BI stops debt monetisation.
“Even though the growth rate will likely drop over the next
few quarters, we expect BI to raise the policy rate by an
additional 100 basis points in the face of an aggressive Fed
with a higher-than-expected terminal policy rate,” Kundu said.
Most other Asian currencies rose, with Thailand’s baht
up for a third straight session, as hopes that China
would ease its stringent COVID-19 curbs supported broader market
sentiment and hit the dollar.
Regional equities were also mostly higher, with Taiwanese
shares adding close to a percent, South Korea’s KOSPI
up 1.1%, and Thai shares gaining 0.6%.
Khoon Goh, head of Asia research at ANZ, said markets traded
positively on hopes of China reopening despite officials over
the weekend reaffirming a zero-COVID strategy.
“I think markets are of the view that the worst is probably
past,” Goh said.
China will improve the its COVID prevention policy operates
to make it easier for people to travel to and from the capital
city, a government official said on Monday.
In the Philippines, the peso appreciated 0.6% after
incurring losses on Monday. The nation’s unemployment rate eased
for a third month in a row in September and fell to a new low
since the COVID-19 pandemic began.
** BOJ debated impact of future exit from easy policy amid
** Guangzhou’s COVID outbreak deepens as more lockdowns loom
** Vietnam central bank chief says it can provide liquidity
to the banking system
Asia stock indexes and
currencies at 0342 GMT
COUNTRY FX RIC FX FX INDE STOCKS STOCKS
DAILY % YTD % X DAILY YTD %
Japan -0.02 -21.5 <.n2>
India 0.00 -9.27 <.ns ei>
Indonesi +0.16 -9.12 <.jk a se>
Malaysia -0.04 -12.1 <.kl se>
Philippi +0.55 -12.2 <.ps nes i>
Singapor -0.09 -3.76 <.st e i>
Taiwan +0.20 -13.5 <.tw ii>
Thailand +0.20 -10.4 <.se ti>
(Reporting by Jaskiran Singh in Bengaluru, additional reporting
by Navya Mittal)
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