Asian currencies: Indonesia Rupiah stable against US dollar

BENGALURU: Indonesia’s stocks advanced while the rupiah slipped a shade after its central bank delivered a surprise quarter-point rate cut on Wednesday, while a record rally in most emerging Asia equities stalled ahead of a widely expected US monetary policy easing.

Indonesia’s equity benchmark gauge jumped 0.7 percent to a three-week high and was headed for its best close. The rupiah slipped briefly against the dollar to 16,445 but then pared losses, while yields on 10-year government bonds were unchanged at 6.339 percent.

Bank Indonesia slashed its key interest rate by 25 basis points, against expectations of a hold, to prioritise economic growth amid turbulence from protests, the abrupt departure of a reputed finance minister, and concerns over the central bank’s autonomy.

However, a largely sedate reaction in the rupiah and bonds signalled investor confidence in the administration maintaining fiscal discipline.

“Rupiah assets remain sensitive to domestic political developments, especially over signs of any compromise to the central bank’s independence,” said Radhika Rao, a senior economist at DBS.

“Beyond knee-jerk weakness, the currency and bond markets have given the benefit of doubt to the administration, with expectations that the fiscal deficit will be kept within target this year.”

Equity gauges in Taiwan and South Korea slipped from their record levels scaled in the previous session, with the latter falling more than 1 percent to snap an 11-session winning streak.

The MSCI gauge of EM Asia stocks was up 0.5 percent, as of 0800 GMT, climbing for the ninth consecutive session to a four-year peak, though downbeat performances in Taiwan and South Korea limited the upside.