Indonesian shares hit a record high on Friday, helped by the central bank's forecast that annual inflation would be within its target range, which quelled some concerns around imminent interest rate hikes, and overnight gains on Wall Street.
Equities in Indonesia advanced 0.9% and were eyeing their best week since early January. Stocks in the Philippines also rose 0.9%, marking their best day in two weeks, after its exports rose at the fastest rate in six months in February.
Indian stocks firmed after the country's central bank left its interest rates unchanged, in-line with analysts' expectations, but said it will focus on gradually withdrawing its accommodative policy going forward as inflation rises due to the Russia-Ukraine war.
The Indian rupee strengthened 0.2% while its 10-year benchmark bond yield rose to 7.003%, its highest in nearly three years.
Indonesia's central bank said it expects 2022 inflation to be at the upper bound of its target range or near 4% due to pressures from high global commodity prices, but was confident that it would remain with the target of 2%-4%.
Bank Indonesia has vowed to keep interest rates at a record low, with analysts polled by Reuters expecting a rate hike only in the third quarter.
Most Asian stocks also clawed back some ground after extending losses earlier in the week as investors seemed to gradually digest the Fed's hawkish stance on rate hikes, analysts at OCBC said in a note, while the US dollar hit a near two-year peak, and continued to drag the regional currencies lower.
The Indonesian rupiah, although flat, hit its lowest in nearly one month earlier in the session, while the Philippine peso fell 0.1%.
Asia shares hover at 5-week highs, euro on defensive
"Buoyant UST yields could weigh on foreign flows into IDR bonds in the interim. But drags on IDR could be mitigated to some extent if prices of its coal exports see some support following the EU ban on imports of Russian coal," analysts at Maybank said in a note.
Coal users in Japan and South Korea have also halted Russian coal import in the recent months following its invasion of Ukraine, and are now scrambling to find alternative sources.
Meanwhile, yields on Indonesia's benchmark bonds edged up 6.793% and Singapore's 10-year bond rose to 2.524%, extending gains from the previous session to hit an over three-year high.
Highlights:
** RBI said it would restore the width of the liquidity adjustment facility to 50 basis points.
** Sidomulyo Selaras and Duta Intidaya top gainers on Indonesia's benchmark index, up 28.1% and 24.6% respectively
** Globe Telecom and Converge Information & Communications climb over 3% to lead gains on Philippines benchmark index
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