The Indonesian rupiah hit an over three-month low on Monday, as Asia's emerging markets were mixed amid investors assessing the potential economic fallout of the new Omicron variant and an increasingly hawkish commentary from the US Federal Reserve.
Rupiah fell for a fourth straight session to its lowest since Aug. 20, while South Korea's won weakened 0.5%, its biggest intraday drop in nearly three weeks, against the dollar.
Among regional equities, Indonesia, Singapore and Philippine shares gained between 0.7% and 1.4%, while India's Nifty 50 shed 0.7% after the country reported more cases of the Omicron variant over the weekend.
Regional investors are awaiting inflation and trade data from manufacturing powerhouse China, while also facing a week-long wait for US inflation data that could settle the course for interest rates, likely making the case for early tapering.
"Fed speakers, including Jerome Powell, have been more vocal around the risks from persistently higher inflation, and with it the implicit assumption of a faster timeline for ending asset purchases and subsequently raising the policy rate," analysts at Mizuho Bank said in a note.
"The timeline towards an expedited taper being announced at the December meeting is increasingly being priced in."
Chinese yuan strengthened against the dollar as analysts expect the world's second-largest economy to withstand the fallout from the Omicron variant better than its peers.
The Indian rupee declined 0.2% to its lowest since mid-October and the Nifty 50 extended losses for a second day, with the central bank's decision on cash rate just days away.
The Reserve Bank of India is expected to hold rates in its meeting on Wednesday, but it's likely to hike its reverse repo rate early next year and increase its repo rate the following quarter, a Reuters poll showed.
"The RBI may nod in the direction of recent higher than desirable inflation figures and could flag the possibility of a small increase in rates early next year," analysts at Dutch-bank ING said.
Elsewhere, the Malaysian ringgit, Philippine peso and Singapore dollar firmed 0.2% each. Analysts at OCBC Bank expected the Singapore dollar to remain under pressure against a stronger greenback, pointing to a firm resistance at 1.3750.
Analysts at HSBC said in a note they expect equities in ASEAN nations including Singapore, Indonesia, Malaysia, Thailand, and the Philippines to be well-positioned for 2022 on likely growing earnings momentum, low valuations, and high dividend yields.
Highlights:
** Indonesian 10-year benchmark yields rises 2.1 basis points to 6.414%
** Alibaba overhauls e-commerce businesses, appoints new CFO; HK stock tumbles to record low
** Emerging market FX gains seen modest amid tighter Fed and China, Omicron risks
** Thai markets were closed for a holiday.
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