Indonesian rupiah, Philippine peso gain on rate hike prospects

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Indonesia’s rupiah gained for a second

straight session on Tuesday, while the Philippine peso also

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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%

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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

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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

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investors booked profits on concerns that a recent rally fueled

by bets of an eventual economic reopening was not sustainable.

HIGHLIGHTS:

** G20 host Indonesia has ‘strong impression’ Putin will

skip Bali summit – FT

** Malaysia’s Sept industrial production up 10.8%, above

forecast

** Beijing to improve COVID prevention policy operation for

residents leaving and returning to city

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> ! !

China 9 EC>

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>

S.Korea 0 11>

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)