Asian currencies: Rupiah gains after losses

BENGALURU: Indonesia’s rupiah snapped a three-day losing run and stocks extended gains on Thursday, a day after the central bank held rates as expected, while other Asian markets were lifted by the

Federal Reserve signalling two more rate cuts this year.

The rupiah, hammered down more than 2% this year, strengthened 0.3% to 16,470 per US dollar. Stocks climbed 1.2%, recovering for a second straight day from their biggest drop in nearly three years on Tuesday.

Bank Indonesia (BI) held policy rates after the recent market turmoil, which saw investors withdrawing from stocks and selling high-yielding bonds due to concerns over fiscal health, government policies and weakening domestic demand.

Governor Perry Warjiyo said the rupiah should strengthen based on the country’s fundamentals, but was under pressure due to global economic uncertainties. He said while there was room for rate cuts, these uncertainties hampered such a move.

The uncertainty also led to the risk of equity outflows from both domestic and foreign investors, Citi analysts said in a note. “The magnitude of BI FX intervention could, hence, escalate in this period, thereby keeping BI cautious.”

DBS analysts, though, expect a rate cut in April if the uncertainties persist.

Over in the United States, the Fed projected two rate cuts over the rest of the year and Chair Jerome Powell said the US tariff-driven inflation will be “transitory”.

That eased fears of a higher-for-longer rate environment and sparked gains in most Asian markets. Taiwan equities jumped 1.9% and Singapore’s stocks rose 0.7% to a near one-month high.

Nomura analysts said disinflation is widespread in Asia even before US tariffs are fully implemented and the risk to growth and inflation, coupled with high real rates, indicate there is still room for easing by Asian central banks.