Indonesian rupiah, Philippine peso gain on rate hike prospects
Indonesia’s rupiah gained for a second
straight session on Tuesday, while the Philippine peso also
firmed, as upbeat data from the countries raised expectations of
further interest rate hikes by their central banks.
Southeast Asia’s largest economy, Indonesia, has seen the
rupiah gain 0.3% since reporting third-quarter growth
data on Monday. Still, the currency is still down nearly 10%
against the U.S. dollar this year.
Jakarta’s main stock index, however, dipped 0.4%
after three days of gains, as analysts felt strong growth may
embolden Bank Indonesia (BI) to raise rates aggressively as it
follows other 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.
The Philippine peso appreciated as much as 0.6% after
the country’s unemployment rate in September eased for a third
month running, potentially signaling that the economy could
withstand sharp rises in rates.
“Bangko Sentral ng Pilipinas (BSP) will likely match any
increase by the U.S. Federal Reserve from here on and we only
see a turn when the Fed finally pivots sometime next year,” said
Nicholas Mapa, a senior economist at Dutch bank ING.
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 the broader
market sentiment and hit the dollar.
Regional equities were also broadly higher, with Taiwanese
shares adding close to a percent, South Korea’s KOSPI
up 1.1%, and Thai shares gaining 0.7%.
Chinese stocks slipped 0.9% though, as some
investors booked profits on concerns that a recent rally fueled
by bets of an eventual economic reopening was not sustainable.
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Asia stock indexes and
currencies at 0613 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 +0.13 -9.15 <.jk a se>
Malaysia -0.08 -12.1 <.kl se>
Philippi +0.43 -12.3 <.ps nes i>
Singapor -0.19 -3.86 <.st e i>
Taiwan +0.15 -13.6 <.tw ii>
Thailand +0.01 -10.6 <.se ti>
(Reporting by Jaskiran Singh and Navya Mittal in Bengaluru;
editing by Uttaresh.V)
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