BENGALURU: Asian currencies fell on Thursday as the US dollar firmed after the Federal Reserve signalled a more measured approach to easing, while Indonesia’s rupiah slid to a four-month low after its central bank delivered a surprise rate cut.
Indonesia’s equity benchmark gauge was trading at its highest-ever point in afternoon trade, while the rupiah slipped 0.6 percent to 16,515 per dollar, its weakest since mid-May.
Bank Indonesia on Wednesday surprised markets with a quarter-point cut to support growth amid social unrest and investor worries over fiscal discipline after the abrupt sacking of its finance minister.
“BI is likely to use a mix of liquidity operations and targeted interventions to smooth volatility and maintain orderly market conditions, particularly as the government’s pro-growth policies may raise concerns of fiscal slippage,” said Shier Lee LIM, lead FX and macro strategist at Convera in Singapore.
“While there may be short-term pressure on the IDR, the authorities’ ability to act pre-emptively should help mitigate the risk of disorderly movements.”
The rupiah is one of emerging Asia’s worst-performing currencies so far this year, pressured by a soft dollar, concerns over Indonesia’s finances, and, of late, the sudden cabinet reshuffle and concerns over the central bank’s autonomy.
Currencies across emerging markets pulled back against the dollar after the Federal Reserve delivered a widely anticipated quarter-point rate cut but indicated further policy easing would come at a steady pace, tempering market expectations of more aggressive easing.
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