Indonesian rupiah an outlier among weak Asian FX as inflation eases

Reuters

Indonesian rupiah an outlier among weak Asian FX as inflation eases

5 Jun, 2023 a las 7:40 a. m. GMT

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Rupiah only outlier

U.S. dollar trades firm

Lira down more than 1%

By Roushni Nair

June 5 (Reuters) -The Indonesian rupiah emerged as the only bright spot among Asian currencies on Monday after annual inflation in Southeast Asia's largest economy eased to match the upper end of the central bank's target range sooner than expected.

The rupiah IDR= strengthened 0.71% to the U.S. dollar, on track forits best session in nearly five weeks, though the Philippine peso PHP= and Chinese yuan CNY= led losses to weaken 0.2% each.

Indonesia's annual inflation, which had been above Bank Indonesia's (BI) 2% to 4% target range since June 2022, eased to 4% last month, data from the statistics bureau showed on Monday. BI has hiked interest rates by a total of 225 basis points.

"With the Fed tightening cycle likely over, declining headline inflation and the more stable IDR, we continue to expect Bank Indonesia to keep policy rates on hold in coming months," analysts at Goldman Sachs said in a note.

Analysts at Barclays expect a 75 bps interest rate cut in the first half of 2024, though risks of an earlier move linger. The next scheduled BI meeting is on June 21-22.

Separately, Perry Warjiyo, Indonesia's central bank governor, reiterated that the rupiah's exchange rate against the U.S. dollar could strengthen, reflecting improving fundamentals.

Equities in Jakarta .JKSE pared earlier gains to trade flat after Indonesia's biggest tech firm GoTo Gojek Tokopedia PT Tbk GOTO.JK gave up as much as 14.97%, on track for its biggest-ever one-day decline.

The embattled firm, which is restructuring its business to streamline operations and boost profitability, said it will cut more 30 jobs in addition to the 600 roles that will be affected. The company had slashed 1,300 jobs last year.

The U.S. dollar recouped some of its losses from the previous session, with the dollar index =USD trading at 104.21 by 0656 GMT, a jump from Friday's last close of 104.03. USD/

Tracking the strength in U.S. dollar, most Asian currencies in the region were largely weak: the Indian rupee INR= depreciated by 0.22% eyeing its worst day in nearly a week, while the South Korean won KRW=KFTC weakened as much as 0.41%. The Singapore dollar SGD= depreciated 0.2%.

Turkey's lira TRYTOM=D3 weakened more than 1% in a shaky initial reaction to the appointment of highly-regarded Mehmet Simsek as finance minister.

In the United States, the Fed is expected to pause interest rate hikes at its June 13-14 meeting after last week's data highlighted wage pressures had started to ease and the unemployment rate climbed off a 53-year low.

Most equities markets in the region enjoyed an extended rally on easing interest rate jitters; shares in South Korea .KS11, Singapore .STI, and the Philippines .PSI rose between 0.3% and 0.7%.

HIGHLIGHTS:

** India services activity fell to 61.2 in May from 62.0 in April nZRN006K4E

** Markets in Malaysia and Thailand are closed on account of a public holiday.

** Oil up $1 on Saudi plan to deepen output cuts from July nL1N37W0IO

Asia stock indexes and currencies at 0605 GMT
COUNTRY	FX RIC	FX DAILY %	FX YTD %	INDEX	STOCKS DAILY %	STOCKS YTD %
Japan	JPY=	-0.16	-6.46	.N225	2.20%	25.28%
China	CNY=CFXS	-0.2	-2.96	.SSEC	-0.06	4.5
India	INR=IN	-0.31	0.19	.NSEI	0.55	2.93
Indonesia	IDR=	0.71	4.61	.JKSE	-0.03	-3.21
Malaysia	MYR=	-	-3.83	.KLSE	-	-7.64
Philippines	PHP=	-0.24	-0.85	.PSI	0.43	-0.4
S.Korea	KRW=KFTC	-0.09	-3.24	.KS11	0.47	16.86
Singapore	SGD=	-0.08	-0.8	.STI	0.58	-2.05
Taiwan	TWD=TP	-0.15	0.03	.TWII	0.05	18.23
Thailand	THB=TH	-	0.03	.SETI	-	-8.24