Friday, June 9

Indonesian rupiah soars as inflation print points to hawkish cenbank stance

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Indonesia’s rupiah surged more than 1%

on Thursday as fears of rate hikes lingered after inflation

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stayed above the central bank’s target range, while a slide in

the US dollar on signs of the Federal Reserve easing its pace

of policy tightening added heft.

The rupiah, which has shed more than 8% this year,

firmed as much as 1.3% and enjoyed its best day in nearly three

weeks, after data showed Indonesia’s inflation eased in November

but stayed above the central bank’s target range of 2%-4%.

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Bank Indonesia (BI) would maintain a front-loaded and

pre-emptive interest rate policy next year to control inflation,

Governor Perry Warjiyo said on Wednesday.

“Core inflation was tagged as one of the main factors that

would drive any BI policy adjustment and we will need to see

this head much lower before BI considers reversing its current

hawkish stance,” said Nicholas Mapa, a senior economist at ING.

“One other factor that could keep BI on the hiking path

would be the Indonesian rupiah… We expect BI to follow through

with a rate hike in December although we could see BI slow its

pace of tightening as early as next year.”

Stocks in Jakarta eased 0.6%.

Broader strength in Asia was supported by comments from Fed

Chair Jerome Powell overnight, while easing COVID curbs in China

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Also provided investors with some respite.

“The (Powell’s) speech seemingly provided markets some

Clarity that the down-shifting is coming earlier than expected,

as markets were previously still split in their expectations for

December,” said Yeap Jun Rong, market strategist at IG.

Malaysia’s ringgit hit a more than five-month high

against the US dollar and firmed 1%. The currency has

strengthened about 2% since the appointment of a new prime

minister last week, but is still down 5.5% for the year.

Thailand’s baht, which gained on Wednesday after

the central bank raised rates by 25 basis points, climbed a

0.5% further to its highest level since June 29.

Most stock indexes also clocked gains with Thailand

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touching a more than two-month high, though stocks in the

Philippines lost 0.5% and snapped a six-day winning


Philippines’ central bank, meanwhile, hinted at policy

flexibility to bring inflation back to target.


** Indonesian 10-year benchmark yields fall 7.3 basis points

to 6.876%

** China Caixin manufacturing PMI beats at 49.4 vs poll 48.9

** Factory output slumped widely across Asia in November-


Asia stock indexes and currencies at

0717 GMT




Japan +1.45 -15.4 0.92 -1.97



India +0.34 -8.40 0.48 8.61

Indonesia +1.19 -8.33 -0.60 6.95

Malaysia +0.98 -5.36 0.32 -2.86

Philippines +0.57 -9.19 -0.68 -5.44


Singapore +0.41 -0.50 0.26 5.62

Taiwan +0.88 -9.65 0.90 -17.60

Thailand +0.50 -4.44 0.93 -0.43

(Reporting by Roushni Nair in Bengaluru; Editing by Dhanya Ann




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