Most Asian currencies subdued, Indonesian rupiah on back foot
Asian emerging currencies were subdued on
Tuesday as recession concerns curbed risk taking and buoyed the
dollar, while the Indonesian rupiah fell ahead of a central bank
Bank Indonesia (BI), one of a few major Asian central banks
that has yet to begin monetary policy tightening, is expected to
leave rates unchanged at record lows on Tuesday.
“Plans to increase the cost of subsidized fuel have been
floated around and should this be implemented, we believe it
could be a trigger for BI to finally raise rates by the end of
3Q22,” analysts at ING said in a note.
The country has tripled its subsidy budget this year to keep
prices of gasoline, diesel and some power tariffs unchanged. The
huge subsidy bill has helped keep inflation relatively
Indonesia’s rupiah, which has fallen 4.5% so far this
year, weakened 0.1% to hit its lowest in two weeks.
Concerns over global growth persisted on an aggressive U.S.
Federal Reserve policy view and after a renewed spike in
European energy prices stoked recession fears.
The dollar index firmed 0.1% bolstered by the growing
possibility of a hawkish message from the Fed’s Jackson Hole
symposium later week.
The Singapore dollar was 0.1% firmer and the
benchmark index 0.6% lower after the city-state’s key
consumer price gauge rose 4.8% in July, its fastest pace in more
than 13 years.
A Reuters poll estimated July core inflation of 4.7%
The country’s core and headline inflation figures will
provide further cues to the Monetary Authority of Singapore’s
(MAS) stance on tightening policy.
“The lack of any signs of inflation peaking thus far may keep
the MAS’ tightening stance intact as we inch closer to the
October meeting,” Yeap Jun Rong, a market strategist at IG said
in a note.
Crude prices slid overnight and weighed on Malaysia, a net
exporter of oil. The ringgit pared earlier losses and was
flat around 0448 GMT, while equities in Kuala Lumpur
Among other Southeast Asian currencies, Thailand’s baht
fell 0.3%, its lowest in more than two weeks.
South Korea’s won fell 0.1%, its weakest since
April 2009. Stocks in Seoul dropped 0.9% and were on
track for their longest losing streak in two months.
All but one of 36 economists polled by Reuters forecast the
Bank of Korea will raise its policy rate by 25 basis point (bps)
at its meeting on Thursday. One expected a 50 bps hike.
** India’s benchmark 10-year yields rise 3.5 points to
** Malaysia’s exports of palm oil products for August 1 to
August 20 fell 0.8%
The following table shows rates for Asian currencies against the
dollar at 0448 GMT.
COUNTRY FX RIC FX FX INDEX STOCK STOCKS
DAILY YTD % S YTD %
Japan +0.16 -16.1 -1.18 -1.17
Indonesia -0.10 -4.36 0.77 8.83
Malaysia -0.04 -7.16 -0.53 -5.61
Philippines +0.02 -9.25 -1.64 -7.42
Singapore +0.06 -3.44 -0.60 3.82
(Reporting by Upasana Singh in Bengaluru; Editing by Jacqueline
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