BENGALURU: Asian currencies surged on Friday, with Indonesia’s rupiah and South Korea’s won leading the charge against a weakening dollar as disappointing US economic indicators cemented expectations for more Federal Reserve interest rate cuts this year.
The rupiah strengthened as much as 0.7% to 16,395 per dollar, staging a notable recovery despite being the region’s worst performer year-to-date with losses exceeding 2%. The unit was last up 0.5%.
“The rupiah is playing catch up to the recovery of other Asian currencies, after an extended bout of underperformance, riding also on better sentiments in the onshore stock market,” said Radhika Rao, senior economist at DBS Bank.
Jakarta’s benchmark index climbed 0.6% on Friday, extending its winning streak to a fifth consecutive week with a robust 4% advance since Monday.
With inflation still within the target range, policymakers have room to reinforce their pro-growth stance with an interest rate cut this month, Rao said.
Bank Indonesia will deliver its policy decision on Wednesday, and analysts anticipate rates will remain unchanged.
Other regional currencies also advanced, with the Malaysian ringgit and Philippine peso gaining 0.2% and 0.4%, respectively, while the Thai baht added 0.2%.
The South Korean won rose 0.5%, advancing for a fourth consecutive session in its third straight week of gains.
The currency broke through the psychologically important 1,400 level on Wednesday with a 1.8% surge following talks between South Korea and the US to discuss the dollar/won market on May 5.
The sharp movement mirrors the Taiwanese dollar’s early-May rally, when it surged 6% over two days. On Friday, it edged up 0.2%, heading for a seventh consecutive weekly rise.
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