Indonesian rupiah leads Asian currencies higher ahead of U.S. CPI data

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Indonesia’s rupiah led gains among

emerging Asian currencies on Thursday, ahead of U.S. inflation

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data that could determine the pace of the Federal Reserve’s rate

increase path.

The rupiah strengthened as much as 0.9% to its

highest level in over three months, a day after the country’s

government said it was reviewing a regulation requiring

exporters of natural resources to keep earnings in a special

account at domestic banks.

The regulation on export earnings has been in place since

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2019 as a measure intended to stabilize the rupiah exchange

rate.

Other regional currencies also firmed, with the South Korean

won and the Malaysian ringgit both advancing

0.1%.

“Emerging currencies are consolidating before U.S. CPI

tonight, so risk positions are more limited in the near term,”

said Chang Wei Liang, FX and credit strategist at DBS Bank.

The U.S. dollar was steady ahead of the closely watched U.S.

inflation data out today, which will provide more clarity on how

much inflation in the world’s largest economy has tamed and on

the Federal Reserve’s rate increases.

“Expectations are for U.S. inflation print to come in lower

and demonstrate that inflation could be peaking, building the

case for the Fed to downshift rate hikes and provide a little

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bit of impetus for Asian currency strength against the dollar,”

Liang added.

Thailand’s baht appreciated 0.2%. Thai consumer

confidence rose for a seventh straight month in December,

reaching a 25-month high, boosted by improved economic activity

and higher foreign tourist arrivals.

Meanwhile, the Philippines’ central bank governor said the

likelihood of cutting reserve requirements for banks in the

first half of year is quite high.

The reserve requirement ratio for banks will be reduced when

the central bank is no longer under pressure to raise benchmark

rates, Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla

told ANC news channel.

The peso weakened 0.2%, while stocks in Manila

rose 0.9%.

China’s annual consumer inflation rate accelerated in

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December, driven by rising food prices even as domestic demand

wavered amid restrained economic activity during the month.

The yuan rose 0.1% and hovered at a five-month

high, while stocks in Shanghai fell 0.2%.

Equities in the region were mixed. Stocks in Jakarta

rose 1%, while those in Thailand and Singapore

fell 0.3%.

Meanwhile, Japan’s yen firmed 0.6% after reports that

the Bank of Japan would review the side effects of its monetary

easing at next week’s policy meetings and may take additional

steps to correct distortions in the yield curve.

HIGHLIGHTS

** The Bank of Korea will raise interest rates by another

quarter percentage point on Friday, a Reuters poll says

** India’s inflation data due later today

** The Brazilian real gained 0.5% on Wednesday after

a volatile start to the week as supporters of far-right former

President Jair Bolsonaro stormed the seats of power in Brasilia

on Sunday

Asia stock indexes and currencies

at 0419 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan +0.61 -0.43 <.n2>

China EC>

India -0.12 +1.28 <.ns ei>

Indonesi +0.78 +1.33 <.jk a se>

Malaysia +0.08 +0.79 <.kl se>

Philippi -0.22 +0.96 <.ps nes i>

S.Korea 11>

Singapor +0.02 +0.73 <.st e i>

Taiwan +0.07 +0.96 <.tw ii>

Thailand +0.16 +3.66 <.se ti>

(Reporting by Himanshi Akhand in Bengaluru)